Department of Consumer Affairs (DCA) Commissioner Julie Menin today announced the results of a three-week enforcement sweep of income tax preparers throughout the City. Out of the nearly 600 tax preparers inspected, one in four were in violation of the New York City Consumer Protection Law for failing to post qualifications, fees, and disclosures in all languages in which the preparer advertises, for failing to inform consumers that every return filed must be signed, and for not providing consumers with a copy of New York City’s Bill of Rights Regarding Tax Preparers.
In light of these findings, Commissioner Menin encourages New Yorkers who made $60,000 or less last year to file for free with the City’s tax preparation services, which include nearly 200 in-person sites, drop-off sites and online preparation at nyc.gov/taxprep.
“This year, the Department has gone above and beyond previous years to ensure that every eligible New Yorker takes advantage of the City’s free tax preparation services,” said Commissioner Julie Menin. “Not only did we invest more in our outreach campaign and in our partners to expand the number of sites available, but our inspectors are also out there ensuring that New Yorkers are not taken advantage of by unscrupulous tax preparers. We encourage New Yorkers who choose the paid preparer route to take a look at our tips and file a complaint with us if they feel their tax preparer is not following the law.”
DCA issued more than 450 violations to tax preparers in all five boroughs during the sweep. In New York City, according to the Consumer Protection Law, tax preparers must post their qualifications, fees and charges, and whether or not they will represent consumers at a government audit. These signs must be posted in English and any language in which the preparer advertises. Preparers must sign every tax return, and provide their customers with a copy of their tax return and an itemized receipt for their services.
Earlier this year, DCA conducted two industry trainings to educate preparers about their responsibilities and also made available an inspection checklist of what inspectors look for during an inspection and templates for signage at nyc.gov/BusinessToolbox.
New York City residents pay an average of $250 to have a preparer complete their tax forms. Some of these tax preparers fail to post their costs up front, forcing hard-working individuals and families to pay hidden and/or additional fees.
The Department of Consumer Affairs also wants to make sure eligible New Yorkers claim refund-boosting tax credits like the Earned Income Tax Credit (EITC) and NYC Child Care Tax Credit (NYC CCTC), which could be worth up to $10,000. Currently, 1 in 5, or approximately 250,000 New Yorkers, are not taking these credits. EITC, the largest poverty reduction program in the U.S., is a federal, state and New York City tax credit for qualifying families, non-custodial parents (NYS EITC only), and singles who work full time or part time or are self-employed. During the 2012 tax season, approximately 30 million U.S. families claimed EITC totaling more than $60 billion. For working families in New York City, EITC refunds average $2,500, and can be worth as much as $8,293. Filers with child care costs for children under the age of four could also be eligible for the Child Care Tax Credit, of up to $1,733. Combined, these credits can total almost $10,000.
For the first time, the City invested $3.1 million to increase the number of New Yorkers taking advantage of free tax prep, including $2.3 million to expand services and locations of tax prep sites, which offer IRS-trained tax preparers for free, at convenient neighborhood locations. The $800,000 advertising component of the tax credit campaign, which will run through April, is nearly five times the investment in advertising as previous years in an effort to reach a broad audience and target messaging to key audiences based on factors, such as income and language access.
If you made $60,000 or less, call 311 or nyc.gov/taxprep to file for free, using the City’s tax prep services. If you made $53,000 or less, there are nearly 200 sites across the city where an IRS-certified volunteer will prepare your taxes for you or, at some, you can drop off your paperwork and pick up the completed return later. If you made $60,000 or less, you can file online for free at nyc.gov/taxprep.
If you’re paying a tax preparer to do your taxes, follow these tips:
Know Your Tax Preparer. Tax preparers must post their qualifications, fees and charges, and whether or not they will represent you at a government audit. Any advertised terms, such as “expert,” “master,” “consultant” or “specialist” must be justified. Preparers must sign every tax return, and provide you with a copy of your tax return and a receipt for your services.
What a Tax Preparer Must Give You: Tax preparers may not charge you fees based on the amount of taxes you owe or your anticipated refund. Never sign a tax return that is blank, incomplete, or filled out in pencil. It could be changed later. Tax preparers are required by law to give each customer a free, current, and legible copy of the Consumer Bill of Rights Regarding Tax Preparers before any discussions with a consumer.
Avoid “Instant,” “Rapid,” “Express” or “Fast Cash” Refunds. “Instant” refunds are actually loans with extremely high interest rates known as refund anticipation loans. Using direct deposit is the fastest way to get your refund. If you don't have a bank account open an NYC SafeStart account with has no fees and no or a low minimum balance requirement.
Don’t Pay Cash. Never mail cash when paying.
Report Suspected Fraud. If you need to file a complaint about a tax preparer, you can do so online at nyc.gov/consumers or by calling 311.