Attorney General Anne Milgram Charges Tax Preparers
Falsely Advertised “Same Day” Tax Refunds
NEWARK - Division of Consumer Affairs investigators have cited 38 businesses statewide for false advertising in offering “same day” tax refunds, following inspections last month of more than 600 businesses offering tax preparation services.
The cited businesses advertised “instant,” “same day,” or day-specific (“1 Day”, “2 Day”) refunds when the Internal Revenue Service (I.R.S.) cannot provide tax refunds on such a timeline. The I.R.S. states on its web site that it takes at least eight days to directly deposit a refund into a consumer's bank account after a tax return is electronically submitted.
The Attorney General will seek a total of at least $81,000 in fines for the violations of the New Jersey Consumer Fraud Act, plus $9,500 for reimbursement of the state's investigative costs.
“The storefront signs, posters and flyers lured consumers in with false statements. If these businesses really are offering Refund Anticipation Loans, their advertisements must fully disclose that fact,” Attorney General Anne Milgram said. “Our Advertising Regulations are clear - making false or misleading representations is unlawful.”
Each of the 38 businesses (chart attached) was served with a Notice of Violation. Each inaccurate or misleading sign, placard or flyer is considered a separate violation of the Consumer Fraud Act's Advertising Regulations. The Attorney General is seeking a civil fine of $1,500 for each violation. Each business also must pay $250 to reimburse the state its investigative costs.
“Bottom-line, there is no such thing as an 'instant' or 'same-day' tax refund,” Milgram noted. “The fastest way to get a refund from the I.R.S. is to electronically file a return and have the refund direct-deposited into the consumer's bank account.”
This enforcement action is the Attorney General's latest step in her continuing effort to crack down on deceptive sales of predatory Refund Anticipation Loans. A Refund Anticipation Loan (RAL) is a high-cost loan that is secured by the taxpayer's anticipated tax refund. RALs can carry triple digit interest rates, hidden fees and may expose consumers to unpaid debt, if their tax refund is not as much as expected.
A study by the Consumer Federation of America and National Consumer Law Center found that 8.67 million U.S. consumers paid about $900 million in loan charges and fees for RALs in 2007. The study also found that RALs are targeted at the working poor, especially taxpayers eligible for the Earned Income Tax Credit, the largest federal anti-poverty program
State consumer affairs investigators were assisted in last month's inspections by county consumer affairs staff in Atlantic, Bergen, Burlington, Camden, Gloucester, Hunterdon, Mercer, Middlesex, Monmouth, Ocean, Somerset and Union counties.
Consumers who sign up for RALs without receiving full disclosure of the terms and conditions of the loans may file a complaint with the Division of Consumer Affairs by calling 800-242-5846 (within New Jersey) or 973-504-6200 or online at http://www.njconsumeraffairs.gov
Businesses that were Served with a Notice of Violation