Scam Alert: April 15 will be here before you know it.
NYC is one of the few cities with a Bill of Rights regarding tax preparation services.
Protect yourself from fraud, identity theft, and unnecessary costs by knowing your rights, which includes receiving a copy of the rules before beginning any discussion with a tax preparation service.
These are smart rules to follow anywhere, even if you don’t live in New York City.
By law, tax preparers must give you a copy of the NYC Consumer Bill of Rights Regarding Tax Preparers before beginning any discussions about tax preparation services.
If they don’t it’s a tip-off to a rip-off.
You have the right to know:
Identification and qualifications of the tax preparer.
- Tax preparers must have a sign stating their relevant qualifications.
Fees and additional charges.
- Tax preparers must have a sign listing their tax preparation services and fees.
Whether or not the tax preparer will represent you at a government audit.
- Tax preparers who fail to post a sign stating they will not represent you at an audit must provide you with representation.
Whether the tax preparer is an attorney (member of the Bar of the State of New York) or a Certified Public Accountant (CPA), certified by the New York State Department of Education, Office of the Professions.
- Tax preparers must tell you if they are NOT an attorney or CPA (though they can still prepare your taxes).
- If a tax preparer uses the word “accountant” in an advertisement, then a Certified Public Accountant or Public Accountant must be present during all business hours, and must exercise control over all tax returns prepared there.
- Note that attorneys, CPAs, and IRS Enrolled Agents do not have to post the signs described above.
You have the right to receive:
A written estimate of the total cost for all charges related to each service offered by the tax preparer, including basic filing fees, interest rates, Refund Anticipation Loan (RAL) processing fees, and any other related fees or charges.
- The estimate should tell you how long you can expect to wait for your refund.
A photocopy of your tax return prepared at the time the original is electronically filed or given to you to mail.
An itemized receipt listing the individual cost of each service and form prepared for you.
- The receipt must list the address and phone number where the tax preparer may be contacted throughout the year.
Your original personal papers returned to you upon request, when the original tax return is given to you for filing (unless the tax preparer is specifically permitted to retain such papers under state law).
Every tax return prepared on your behalf signed by the tax preparer.
It’s illegal for a tax preparer to:
Ask you to sign a blank or incomplete tax return, or alter a tax return after it has been signed by you, without your written consent.
Charge a fee based upon the amount of tax owed or refund due.
Guarantee a specific refund amount, or guarantee that you will not be audited by any government tax agency.
Request that you pay the tax preparer from a portion of your refund.
Reveal any personal information to any person or business other than to you or your authorized designee.
Have your tax refund mailed to the tax preparer, unless you have signed a power of attorney containing such authorization.
Ask you to violate any governmental law, rule, or regulation.
Beware of Refund Anticipation Loans (RALs)
A Refund Anticipation Loan (RAL) is a high-interest loan made through a bank that you must pay back to the bank. A RAL is not an “instant refund” and tax preparers cannot use this or similar terms (“rapid refund,” “express refund,” “preFund,” or “fast cash”) that hide the fact that a RAL is a loan.
Taking out a RAL is optional. Tax preparers cannot require you to take out a RAL or charge you fees beyond the bank’s fees for a RAL.
Before you take out a RAL, a tax preparer first must give you a single sheet of paper that tells you in English and Spanish
- that you are not required to enter into the RAL;
- that the RAL is a loan you must repay regardless of the amount of your tax refund;
- the amount of your expected tax refund;
- the bank fees for the RAL and approximate amount you will receive as your loan;
- the interest rate expressed as the estimated annual percentage rate (APR) based on the amount of time the loan will be outstanding;
- the approximate date you would get your loan money if you take out a RAL; and
- the approximate date you would get your refund without the RAL.
- If you cannot read English or Spanish, the tax preparer must explain this information to you in a language that you understand.
For more information or to file a complaint against an individual offering tax preparation services, call 311 or visit nyc.gov/dca
If your annual income is $64,000 or less, you may qualify for free tax return filing through NYC Free Tax Prep, which could help you claim important tax credits like the Earned Income Tax Credit (EITC) and the New York City Child Care Tax Credit (CCTC).
For more information, call 311 or visit nyc.gov/taxprep.
This article was published originally for the 2018 tax season and updated for 2021.
Evelyn Kanter is a native New Yorker who has written for the NY Times, NY Daily News, NY Post, New York Magazine, and is a former on-air investigative consumer reporter for WCBS Newsradio 88 and WABC-TV Eyewitness News, where I covered scams and frauds on a regular basis.
Evelyn Kanter also is the author of several NYC and Hudson Valley guidebooks, including my latest, 100 Things to Do in NYC Before You Die.