NY Consumer And Worker Protection Dept. Warns Of Predatory Tax Preparers

December 18, 2023

NYC Department of Consumer and Worker Protection (DCWP) Commissioner Vilda Vera Mayuga reminds New Yorkers to protect themselves and their small businesses from predatory tax preparers as the tax season approaches.

DCWP encourages New Yorkers who earned $59,000 as single filers, or $85,000 for families, to use NYC Free Tax Prep and save on tax preparer fees, which average $250.

“Tax season can be a stressful and time-consuming part of the year, but if you qualify for NYC Free Tax Prep services, you don’t need to pay a dime of your hard-earned money to file your taxes,” said DCWP Commissioner Vilda Vera Mayuga. “The IRS has not yet announced when it will begin accepting tax returns, so we want all New Yorkers to be on the lookout for predatory tax preparers offering promises like ‘advance refunds’ or ‘express refund advances.’ We urge all eligible New Yorkers to take advantage of NYC Free Tax Prep this year to 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 $85,000 or less for families, or $59,000 or less as single filers in 2023 will be eligible to file for free with an IRS certified VITA/TCE volunteer preparer using NYC Free Tax Prep.

And this year, NYC Free Tax Prep for Self-Employed Filers offers specialized tax preparation services for gig workers, freelancers and small business owners who often face barriers to filing taxes and managing financial recordkeeping. All self-employed New Yorkers are eligible for our workshops and one-on-one consultations, but only those who make up to $59,000 as single filers, or $85,000 for families, and have business expenses under $250,000 are eligible for free annual and quarterly estimated tax preparation services.

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.

The NYC Department of Consumer and Worker Protection (DCWP)—formerly the Department of Consumer Affairs (DCA)—protects and enhances the daily economic lives of New Yorkers to create thriving communities. DCWP licenses more than 45,000 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. For more information about DCWP and its work, call 311 or visit DCWP atnyc.gov/dcwp 

Photo credit: Vilda Vera Mayuga.

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