|
NEWARK
– A task force led by the Office of
the Attorney General and State Division
of Consumer Affairs, along with the Bergen,
Camden, Gloucester, Mercer, Monmouth, Ocean
and Somerset county offices of consumer
affairs, last week inspected 574 tax preparation
offices statewide in search of false and
misleading advertising of so-called “instant,”
“same day” and “24 hour”
tax refunds.
Attorney
General Paula T. Dow and Thomas R. Calcagni,
Acting Director of the State Division of
Consumer Affairs, today reminded taxpayers
that there is no such thing as an “instant”
tax refund, as the IRS cannot issue refunds
that quickly.
So-called
“instant” refunds offered by
some tax preparers are usually Refund Anticipation
Loans (RALs), which often come with high
fees and interest rates that cut deeply
into the amount a taxpayer would receive
from the IRS.
“The
promise of fast cash and an instant refund
can be very attractive, especially in times
of economic hardship. 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,” Attorney
General Paula T. Dow said.
“Taxpayers
should be wary of Refund Anticipation Loans,
and resist the temptation of getting only
some of their money today. 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,” Thomas R.
Calcagni, Acting Director of the State Division
of Consumer Affairs, said.
The
Division of Consumer Affairs investigators
found five businesses falsely advertising
RALs in storefront signs, posters or flyers
as “instant” or “same
day” refunds. Each inaccurate or misleading
sign is considered a separate violation
of the Consumer Fraud Act’s Advertising
Regulations. The State is seeking a civil
fine of $1,500 for each violation, for a
total of $7,500 in fines; and reimbursements
of $250 from each cited business for the
state’s investigative costs, for a
total of $1,250 in reimbursements. The businesses
cited last week are: Demian and Co., LLC,
in Cranford; MB Motor Sports, Inc., in Tinton
Falls; City Tax in Jersey City; Girotel
NJ, LLC in Union City; and Personal Touch
Taxes, LLC in Newark.
Tax
preparers who offer RALs are required to
advertise them accurately. They are prohibited
from requiring a client to enter into a
refund anticipation loan 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.
Consumers
who consider obtaining an RAL despite the
costs should find out how long it will take
to get their refund if they file their returns
with the IRS without signing up for an RAL.
Those who choose to obtain an RAL should
carefully read any loan documents, especially
the fine print, before signing. Any such
documents should include:
-
Annual percentage rate of the loan
-
Schedule of all charges and fees
-
Maturity date of the loan
-
List of all charges for electronic filing
-
Date or period within which the loan money
will be received
-
Who is responsible for paying the loan,
if it exceeds the actual refund minus
any interest and fees.
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 (within New
Jersey) or 973-504-6200,
or at www.njconsumeraffairs.gov
Consumers
can download the Consumer Brief factsheet,
“Refund Anticipation Loans: What Consumers
Should Know About ‘Fast’ or
‘Instant’ Refunds,” available
from the State Division of Consumer Affairs
at www.state.nj.us/lps/ca/brief/ral.pdf
.
### |
