Department of Consumer Affairs (DCA) Commissioner
Jonathan Mintz today announced that during a month-long investigation of income
tax preparers throughout the City, DCA inspected nearly 800 tax preparation
businesses and issued 2,010 charges for violations including illegally
advertising refund anticipation loans (RALs) as “instant” or “rapid” refunds.
Total fines from the enforcement sweep could reach more than $1 million.
DCA inspected income tax preparers charged with violations in 2009, as
well as businesses located in neighborhoods with large populations of immigrants
or high usage of refund anticipation loans. The Department issued violations to
nearly 250 income tax preparers, a compliance rate of 69 percent, which was up
from 65 percent in 2009, and 56 percent in 2008.
have to wait eight to 10 days to enjoy every penny of their refunds from the
IRS, and with the City’s new, free online tax preparation service, filing
today is easy,” said Consumer Affairs Commissioner Jonathan Mintz.
“Refund anticipation loans are such expensive and unnecessary products that tax
preparers and lenders generally have to violate New York City law and lie
about them to sell them.”
Refund anticipation loans are predatory, high-interest loans often marketed
as “instant,” “rapid,” or “24-hour” refunds. However, they are actually
expensive, high interest-bearing loans that consumers must pay back even if
their refund is not as large as they had anticipated – a fact that is often not
disclosed by income tax preparers. RALs are not illegal in New York City, but
income tax preparers must disclose that these products are loans with annualized
interest rates as high as 500 percent, significantly decreasing an expected
To ensure New Yorkers protect their money and get every penny of their
hard-earned refunds, the City is offering free, online tax preparation service
for residents who earn $58,000 or less per tax return by visiting nyc.gov/OnlineFreeTaxPrep. The
service is powered by One Economy Corporation – a nonprofit that leverages the
power of technology to empower people to enter the economic mainstream – with
its online tax filing software The Beehive. In 2007, nearly 2.5 million New
Yorkers paid to have their income tax returns prepared. The City estimates that
more than 2.7 million New Yorkers may qualify for this free online tax
DCA enforces the Consumer Protection Law and other related business laws
throughout New York City. Ensuring a fair and vibrant marketplace for consumers
and businesses, DCA licenses more than 71,000 businesses in 57 different
industries. Through targeted outreach, partnerships with community and trade
organizations, and informational materials, DCA educates consumers and
businesses alike about their rights and responsibilities. DCA’s Office of
Financial Empowerment (OFE) is the first municipal office of its kind in the
nation with a mission to educate, empower and protect New Yorkers with low
incomes. DCA’s OFE administers a citywide network of Financial Empowerment
Centers and other products and services that help these New Yorkers make the
best use of their financial resources to move forward economically. For more
information, call 311 or visit DCA online at nyc.gov/consumers.
Hiring a Tax Preparation Service This Tax Season?
Follow These Tips:
Avoid “Instant,” “Rapid,” “Express,” or “Fast Cash”
refunds. “Instant” refunds are actually loans with extremely high
interest rates known as refund anticipation loans (RALs). RALs must be repaid
even if you don’t get your refund or it is smaller than you expected. If you
have a bank account and file your taxes electronically, you can arrange for
direct deposit of your refund in as little eight days. Ask your tax preparer
about this option.
Know Your Rights When Dealing with Tax Preparers. Tax
preparers must post their qualifications, fees and charges, and whether or not
they will represent you at a government audit. Preparers must sign every tax
return, and provide you with a copy of your tax return and a receipt for your
Protect Yourself. Tax preparers may not charge
you fees based on the amount of taxes you owe or your anticipated refund.
Never sign a tax return that is blank, incomplete, or filled out in pencil. It
could be changed later. Tax preparers are required by law to give each
customer a free, current, and legible copy of the Consumer Bill of Rights
Regarding Tax Preparers before any discussions with a consumer. Visit www.nyc.gov/consumers to download a
Don’t pay cash. Never mail cash when paying your taxes.
Pay by check or money order only.