NYC Department of Consumer and Worker Protection (DCWP) Commissioner Vilda Vera Mayuga today reminded New Yorkers to protect themselves from predatory tax preparer tactics, in particular, “express refund advances” or “refund transfers.”
Some tax preparers also fail to post their costs up front, forcing hard-working individuals and families to pay hidden or additional fees. DCWP encourages New Yorkers who earned $80,000 or less to use NYC Free Tax Prep and save on tax preparer fees, which average $250.
“This tax season, we want all New Yorkers to be on the lookout for predatory tax preparers – the best way to protect yourself and your family is by knowing your consumer rights,” said DCWP Commissioner Vilda Vera Mayuga. “The IRS has not yet announced when it will start accepting returns and your preparer cannot get you your refund any earlier. Any promise of a refund advance is either a loan or a sales tactic you could end up paying for later. We encourage all eligible New Yorkers to take advantage of NYC Free Tax Prep sites, opening in January, to get and keep every penny of your refund without paying for tax preparation services.”
Predatory tax preparer tactics include offering refund advances in the form of an anticipation check or a gift card – enticing filers who look forward to receiving their refunds sooner. Refund Anticipation Loans (RALs), or “express refund advances,” are sometimes advertised as “interest free” and typically offer a portion of a filer’s expected refund. Even when RALs do not include fees or interest, some preparers may charge borrowers higher fees.
Refund Anticipation Checks (RACs), or “refund transfers,” require consumers to agree to have their tax preparation fees deducted directly from their refund for an additional fee. Depending on the product, paid preparers may help the filer open a temporary bank account, with potential transfer fees and other product costs.
Consumers should wait until they receive their final tax statements from their employer, such as a W-2 or 1099, in January to prepare their return, and not use a paystub or past year’s information. This ensures they are filing with the same data the IRS and the New York State Department of Taxation and Finance have on file.
By law, tax preparers must give every filer a copy of the Consumer Bill of Rights Regarding Tax Preparers, which is available in multiple languages, before beginning any discussions about tax preparation services. New Yorkers should be on alert for preparers that overcharge, charge hidden fees, or file a return without permission. Consumers can file a complaint about tax preparers with DCWP by calling 311 or visiting nyc.gov/dcwp.
This coming tax season, when the IRS begins accepting returns in January, New Yorkers who earned $80,000 or less in 2022 will be eligible to file for free with an IRS certified VITA/TCE volunteer preparer using NYC Free Tax Prep. NYC Free Tax Prep offers a variety of free tax prep options, including in-person, virtual, and drop-off options. For more information, contact 311 or visit nyc.gov/TaxPrep.
NYC Department of Consumer and Worker Protection (DCWP) protects and enhances the daily economic lives of New Yorkers to create thriving communities. DCWP licenses more than 51,000 businesses in more than 40 industries and enforces key consumer protection, licensing, and workplace laws that apply to countless more.
By supporting businesses through equitable enforcement and access to resources and, by helping to resolve complaints, DCWP protects the marketplace from predatory practices and strives to create a culture of compliance.
Through its community outreach and the work of its offices of Financial Empowerment and Labor Policy & Standards, DCWP empowers consumers and working families by providing the tools and resources they need to be educated consumers and to achieve financial health and work-life balance.
DCWP also conducts research and advocates for public policy that furthers its work to support New York City’s communities.