Municipal Government

Beware of Predatory Tax Preparers

January 9, 2017
By Neal Tepel

New York, NY – The Department of Consumer Affairs has issued a warning to New Yorkers about predatory tax preparer tactics, in particular those advertising for and selling “express refund advances” or “refund transfers.”

“We are already seeing paid preparers who seem to be capitalizing on the delay in refunds by heavily promoting their refund advance products,” said DCA Commissioner Lorelei Salas. “New Yorkers need to be extremely wary of any promises to get their refund sooner—the IRS won’t accept returns until January 23 and can’t issue refunds until legally allowed. If you are promised otherwise, you may be getting less of the refund you deserve. If you earned $64,000 or less, don’t pay at all—file for free with NYC Free Tax Prep and get every penny of your refund as soon as possible under the new law.”

Due to a new federal law, the PATH Act, the Internal Revenue Service (IRS) is now required to hold refunds until February 15, 2017 for filers who claim the Earned Income Tax Credit (EITC) or the Additional Children Tax Credit (ACTC). Most refunds will then be issued in approximately 21 days, which is almost three times as long as previous years. This is particularly troubling as those that claim EITC and ACTC are often low- to moderate-income working individuals and couples. A 2016 report by the Urban Institute concluded that this is the first time that delaying refunds for a specific group of filers has been used in an attempt to prevent errors and fraud. As a result, the delay will affect those who often rely on their annual refund to help make ends meet. There is  consensus among researchers that this community of taxpayers is a significant consumer base for paid preparers and the delay could result an uptick in the use of  refund products that force consumers to pay hundreds of dollars in unforeseen fees or interest.

“With 2017 tax season officially underway, many tax preparers will lure New Yorkers with the promise of an immediate refund, only to be stuck with high fees and disappointment,” said Council Speaker Melissa Mark-Viverito. “New Yorkers should be aware of these unscrupulous methods and tax preparers should clearly state what’s entailed when offering these quick refunds. I want to thank the Department of Consumer Affairs for bringing to light these predatory tactics as people begin to look to file their taxes.”

“All New Yorkers should check to see if they’re eligible for free City-sponsored tax preparation services, and keep their guard up against ‘early refund’ deals that could cost them in the long-run,” said Manhattan Borough President Gale A. Brewer.

January 8, 2017

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