For procrastinators, the April 18 deadline for filing taxes can’t be put off much longer. Some might be tempted to use whichever tax service offers the best deal, but last week, Mayor Michael Bloomberg and Department of Consumer Affairs (DCA) Commissioner Jonathan Mintz cautioned residents about fraudulent tax preparers.
A citywide investigation over the past few months of 1,200 tax preparers found that one in three violated consumer protection laws. The DCA issued more than 1,600 violations to 439 preparers for violating consumer rights and illegally advertising refund anticipation loans.
Refund anticipation loans are high-interest—sometimes as high as 500 percent—loans given in anticipation of an expected income tax return. If the anticipated tax return is not what was expected, the full amount must still be repaid. They are not illegal in New York City, but services must disclose the full terms of the loan. The DCA found that about half of the businesses offering refund anticipation loans were illegally advertising them as “instant” or “rapid” refunds.
“New Yorkers deserve to get back every penny of their refund, which is why the [DCA] not only offers many ways for people to file for free or low cost, but conducts an annual inspection of hundreds of tax preparers,” Bloomberg said. “If you aren’t using one of the city’s filing options, we want to make sure all New Yorkers are protected at whichever tax preparer they choose.”
The DCA reported that fraudulent use of refund anticipation loans were most frequently used in neighborhoods where a large percentage of the population qualified for the Earned Income Tax Credit.
“New Yorkers deserve to work with qualified and honest tax preparers, which is why the department continues to make this a top priority and has also created a network of free and low-cost tax preparation options for all New Yorkers making $57,000 or less,” Mintz said.
Services offered by the city include volunteer income tax assistance sites where eligible New Yorkers can have their taxes filed for free, a coupon for a discount at H&R Block, assisted online tax preparation where New Yorkers can visit participating sites and file online using Intuit’s TurboTax software, and free online tax preparation at nyc.gov.
Filers at the city’s volunteer income tax assistance sites may also be eligible for a SaveUSA account. Selection for the savings account occurs randomly, so there are still opportunities for interested residents. Under the SaveUSA program, a 50 percent match is given to a person’s tax return as long as it is saved for a year.
For full details on city services and eligibility requirements, visit nyc.gov.
[Caption] Councilman Daniel Garodnick, Mayor Bloomberg and DCA Commissioner Mintz announce the results of the city’s inspections of tax preparers and discuss the many options New Yorkers have to file taxes.