NYC cracks down on `instant tax refund' practices

February 20, 2008 9:00:00 PM PST
If a tax preparer offers you an instant refund, "just say no." The department issued the warning Thursday as it announced the results of its crackdown on predatory and illegal practices in the tax preparation industry.

During a six-week sweep, the department inspected more than 300 businesses and said it issued more than 500 violations.

The violators placed misleading ads for so-called refund anticipation loans - also marketed as instant or 24-hour refunds.

The loans are legal - but carry huge interest rates and fees. Unscrupulous businesses often prey on people who need the money most, the department said, adding that violations are up 75 percent over last year.

"These loans are a bad idea. They often go for as much as 300 percent interest," said department Commissioner Jonathan Mintz.

"If you are a tax preparer offering refund anticipation loans, anticipate this: Consumer Affairs will aggressively enforce laws requiring you to disclose the truth about these disastrous loans."

The department also issued some advice for consumers:

  • Tax preparers are required to give each customer a free, current and legible copy of a document outlining their rights regarding tax preparers, available on the department's Web site.
  • Find out about the tax preparer's qualifications, education and experience. Ask friends and neighbors for recommendations.
  • Never sign an incomplete tax return or one that is filled out in pencil.
  • Beware of a preparer who offers to get your money sooner than in eight to 10 business days.
  • Never allow your refund to be mailed to the tax preparer.
  • Keep an up-to-date record of your tax preparer's address and telephone number.
  • Make a list of any original documents you give the preparer and have the preparer sign the list.

    The crackdown will continue through the tax season.

    For more tips, Click Here.


  • Load Comments