Jersey City Tax Preparer Accused of Falsely Advertising ‘Instant’ Tax Refunds
By Jon Whiten • Feb 7th, 2011 • Category: Blog, News
Jersey City tax preparer City Tax has been cited by New Jersey for falsely advertising Refund Anticipation Loans (RAL) as “instant” and “same day” tax refunds, the state Division of Consumer Affairs and New Jersey Attorney General announced today.
Refund anticipation loans have become a boom industry for the tax preparation industry over the past two decades; the product is often called an “instant refund” even though it is a short-term loan that usually comes with high interest rates and high fees.
“The promise of fast cash and an instant refund can be very attractive, especially in times of economic hardship,” Attorney General Paula Dow says in a statement. “But tax preparers who offer so-called same-day refunds are selling something that does not exist, typically at a high cost to the buyer.”
City Tax, which is located at 1757 Kennedy Boulevard in the Greenville neighborhood, was one of five businesses the state found that was misleading consumers during an investigation of 574 tax preparation offices that took place last week. The state is seeking a civil fine of $1,500 from City Tax, plus a reimbursement of $250 from each cited business for the state’s investigative costs.
Under New Jersey law, tax preparers who offer RALs are required to advertise them accurately, are prohibited from requiring a client to enter into a RAL and must be transparent about the costs involved. Tax preparers must also provide itemized statements of service charges, including charges for tax return preparation, electronic filing, and providing or facilitating the RAL.
Division of Consumer Affairs acting director Thomas Calcagni says that RALs aren’t really worth it, particularly considering how quickly the Internal Revenue Service can process actual refunds for returns filed electronically.
“Taxpayers should be wary of Refund Anticipation Loans, and resist the temptation of getting only some of their money today,” Calcagni says in a statement. “Instead, they can receive their full refund in just three weeks or less, by filing their tax return electronically and opting for direct deposit to their bank account.”
Consumers who signed up for an RAL without receiving full disclosure of the terms and conditions may file a complaint with the Division of Consumer Affairs at 800-242-5846 or at www.njconsumeraffairs.gov.
Image courtesy of the Division of Consumer Affairs
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Jon Whiten is the founding editor of the Jersey City Independent; he now works for a public-policy nonprofit in Trenton.
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