New state law regulates tax preparers

Assemblymember Audrey Pheffer has announced that legislation she introduced to enact the Consumer Bill of Rights Regarding Tax Preparers has been signed into law by Governor David Paterson.
The legislation was modeled after the City of New York’s successful law regulating paid tax preparers.
“While the majority of tax preparers are trained, experienced and conscientious professionals that provide consumers with the information necessary to make informed decisions, it has become apparent that some consumers are not being well served,” said Pheffer.
She continued, “This new state law helps better educate the consumer on tax preparation practices, including Refund Anticipation Loans (RALs). RALs are often misrepresented as an ‘instant refund’ to consumers rather than the high-interest rate loans they actually are.”
The new statute will:

Require paid tax preparers to provide their customers with a “Consumer Bill of Rights Regarding Tax Preparers” to be created and distributed by the Department of Tax and Finance;

Prohibit refund anticipation loans (RAL) from being advertised as a refund and require advertisements for RALs to conspicuously state that it is a loan, that fees and interest will be charged, and include the name of the lending institution;

Require tax preparers to provide a specified written disclosure to a consumer prior to entering into a RAL including information on the nature of the loan, the estimated annual percentage rate of the loan, RAL costs and fees, and the estimated time the customer can expect to receive his or her refund under different circumstances, including if the tax payer elects to file for and receive his or her refund electronically; and

Provide that each violation of this section shall be punishable by a civil penalty of between $250 and $500 dollars for the first violation and between $500 and $750 for each subsequent violation.
The new statute takes effect on January 1, 2009.