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By Gretchen Dykstra
During tax season New Yorkers must stay vigilant.
City residents should beware of tax preparers who promise refunds in one or two days. These services - often billed as "Instant Money" or "SuperFast Cash" - can really be high-interest loans in which consumers are charged as much as 200, 250, or 300 percent interest. Most taxpayers can receive their refund free from the Internal Revenue Service in less than two weeks if filed electronically.
By law, tax preparers must identify such loans to the customer, inform them that they are not required to take them, and disclose fees and percentages charged.
Last year, the Department of Consumer Affairs, the city agency I head, won a $4.2 million settlement against H&R Block for not accurately disclosing information about such loans to clients. And based on investigations over the last two years, the department recently settled a $225,000 case with Jackson Hewitt for similar infractions.
But instant loans aren't the only trap this season. Local law requires all independent tax preparers (unless they are an attorney or Certified Public Accountant) to provide a free copy of the Taxpayer Bill of Rights, either in English or Spanish, which informs New Yorkers of the their rights and outlines what tax preparers are not allowed to do.
It is illegal for a tax preparer to:
In addition to the Department of Consumer Affairs' legal action, we continue aggressive enforcement to ensure that all preparers - big and small - are distributing this Taxpayer Bill of Rights. In fact, inspections show compliance has increased by 30 percent since last year and now hovers around 80 percent citywide, with H&R Block achieving 100 percent compliance for both advertising requirements and the distribution of the Bill of Rights, and Jackson Hewitt at 90 percent.
New Yorkers should also get the tax breaks that they deserve.
Because of our solid record of helping consumers
during the tax season,
Mayor Michael Bloomberg asked the department to coordinate New York's first citywide Earned Income Tax Credit campaign. The Earned Income Tax Credit is a federal tax credit, matched by New York State, that returns cash to hard-working households that earn less than $35,000 annually. A family with children could be entitled as much as $5,000 - just by filing their income taxes. And they can file retroactively for up to three years prior.
Approximately 230,000 New York City residents that qualify for the Earned Income Tax Credit don't file. Last year, the city's campaign to educate New Yorkers helped bring approximately $1.4 billion to the pockets of the working poor and into the city's economy. Now that's real consumer protection.
New Yorkers still have time to file, call 311 or go online for more information and the locations of free filing sites.
Gretchen Dykstra is the commissioner of the
New York City Department of