[HISTORY: Adopted by the Suffolk County Legislature as indicated in article histories. Amendments noted where applicable. Uncodified sections of local laws amending these provisions are included at the end of this chapter.]
GENERAL REFERENCES783a Uncod LL Pro
Tax notices and billing — See Ch. 232.
Consumer protection — See Ch. 387.
Taxation — See Ch. 775.
Tax grievance consultants — See Ch. 779.
Taxation — See Ch. 1143.
Suffolk County Tax Act — See Ch. 1195.
Article I Refund Anticipation Loans
[Adopted 4-5-2005 by L.L. No. 13-2005 (Ch. 461 of the 1985 Code)]
This Legislature hereby finds and determines that tax preparers and other persons are increasingly offering to consumers instant refunds, which essentially allow consumers to obtain what purports to be the proceeds of the consumers' anticipated tax refunds on an expedited basis.
This Legislature also finds and determines that tax preparers and others who offer such instant refunds often do not disclose complete and accurate information to consumers concerning these financial transactions.
This Legislature further finds and determines that the characterization of these financial transactions as "instant refunds" is misleading and that these transactions are instead loans or non-loan-type bank products payable against the consumer's tax refund, which accrue interest, fees and other administrative costs.
This Legislature finds that consumers are often not aware that an instant refund being offered by the tax preparer and other persons is, in fact, a loan and/or a non-loan-type bank product and that the consumer will be charged substantial fees and interest.
This Legislature determines that many consumers are also not aware that these instant refunds may be available to them without the fees, interest or administrative costs charged by the tax preparer or other persons offering these services.
This Legislature also finds that many consumers are under the impression that they are not liable for the full amount of the loan if they do not receive all or part of their tax refund from the Internal Revenue Service (IRS).
This Legislature further finds that the refund anticipation loans drain billions of dollars from the pockets of American consumers, and that tax preparers and facilitators of these transactions often target the working poor who receive the earned-income tax credit (EITC).
Therefore, the purpose of this article is to protect consumers who enter into refund anticipation loan and refund anticipation check (RAC) transactions and to require tax preparers, facilitators, and other persons who offer or facilitate such loans to completely disclose all fees and charges for RALs and RACs facilitated or processed in this County.
As used in this article, the following terms shall have the meanings indicated:
- Any natural person who, singly or jointly with another consumer, is solicited to apply for, applies for, or receives the proceeds of a RAL or RAC.
- CONSUMER AFFAIRS
- The Suffolk County Office of Consumer Affairs.
- Any person who makes a RAL or who takes an assignment of a RAL.
- The Suffolk County Director of Consumer Affairs.
- A person who individually or in conjunction or cooperation with another person:
- An individual, firm, partnership, association, corporation or other business entity.
- REFUND ANTICIPATION CHECK (RAC)
- A check or other payment mechanism:
- A. Representing the proceeds of the consumer's tax refund less application fees;
- B. Which was issued by a depository institution or other person that has or will have received a direct deposit of the consumer's tax refund or tax credits; and
- C. For which the consumer has paid a fee or other consideration for such payment mechanism.
- REFUND ANTICIPATION LOAN (RAL)
- A loan that is secured by, and that creditor arranged to be repaid directly or indirectly from, the proceeds of the consumer's income tax refund or tax credits and includes the payment of interest and/or RAL fees by the consumer. A RAL shall also include any sale, assignment, or purchase of a consumer's tax refund at a discount or for a fee, regardless of whether the consumer is required to repay the buyer or assignee if the Internal Revenue Service denies or reduces the consumer's tax refund.
- REFUND ANTICIPATION LOAN FEE
- The charges, fees, or other consideration charged or imposed directly or indirectly by the tax preparer, or facilitator for the making of, or in connection with, a RAL. This term includes any charge, fee, or other consideration for a deposit account, if the deposit account is used for receipt of the consumer's tax refund to repay the amount owed on the loan. This term does not include any charge, fee, or other consideration usually charged or imposed by the facilitator or tax preparer, in the ordinary course of business, such as fees for tax return preparation and fees for electronic filing of tax returns, if the same fees in the same amount are customarily charged to the facilitator's customers who do not receive RALs or RACs.
- TAX PREPARER or PREPARER
- A person who for valuable consideration advises or assists or offers to advise or assist in the preparation of income tax returns for another.
No person (including any tax preparer, facilitator or other person) may individually or in conjunction or cooperation with another person solicit the execution of, process, receive, or accept an application or agreement for a RAL and/or RAC or in any other manner facilitate the making of a RAL and/or RAC unless the person has complied with the provisions of this article.
Refund anticipation loans.
No tax preparer or facilitator who advertises the availability of a RAL shall directly or indirectly represent such a loan as a tax refund. Any advertisement that mentions, refers, relates, discusses and/or describes a RAL and/or the proceeds of such loan must state explicitly and conspicuously that the monies being referred to, related to, mentioned, discussed, described, and/or offered in such advertisement are in fact a loan, and not a tax refund, and that a refund anticipation fee and/or interest will be charged by the tax preparer, facilitator, or other person offering or issuing such loan. The advertisement must also disclose the name of the person, lender, tax preparer, creditor, or facilitator providing the RAL and/or RAC.
Before any consumer enters into a RAL and/or RAC transaction, the tax preparer, facilitator, or creditor, as applicable, shall disclose to the consumer the following disclosure, in writing, in both English and Spanish, and in a form separate from the application, containing a legend, centered in bold, capital letters and eighteen-point type stating: NOTICE; and stating the following language in at least fourteen-point type:
THIS IS A LOAN.
SPECIFICALLY, THIS IS A REFUND ANTICIPATION LOAN.
YOU ARE NOT REQUIRED TO ENTER INTO THIS REFUND ANTICIPATION LOAN AGREEMENT MERELY BECAUSE YOU HAVE RECEIVED THIS INFORMATION.
IF YOU DO SIGN A CONTRACT FOR A REFUND ANTICIPATION LOAN, YOU WILL BE TAKING OUT A LOAN, AND YOU WILL BE RESPONSIBLE FOR REPAYMENT OF THE ENTIRE LOAN AMOUNT AND ALL RELATED COSTS AND FEES, REGARDLESS OF HOW MUCH MONEY YOU ACTUALLY RECEIVE IN YOUR TAX REFUND. IF YOUR TAX REFUND IS LESS THAN EXPECTED, YOU MUST STILL REPAY THE ENTIRE AMOUNT OF THE LOAN.
IF YOU DO NOT TAKE OUT THIS REFUND ANTICIPATION LOAN, YOU ARE ELIGIBLE TO RECEIVE A GROSS TAX REFUND OF APPROXIMATELY $ [insert amount].
IF YOU DO TAKE OUT THIS REFUND ANTICIPATION LOAN, YOU WILL BE RESPONSIBLE TO PAY $ [insert amount] IN INTEREST AND FEES FOR THE LOAN. AFTER THESE FEES AND INTEREST ARE PAID, YOU WILL RECEIVE APPROXIMATELY $ [insert amount] AS YOUR LOAN.
IF YOUR REFUND IS DELAYED, YOU MAY HAVE TO PAY ADDITIONAL FEES AND INTEREST.
THE ESTIMATED ANNUAL PERCENTAGE RATE OF YOUR REFUND ANTICIPATION LOAN IS [insert amount] %. THIS IS BASED ON THE ESTIMATED AMOUNT OF TIME YOU WILL HAVE BORROWED MONEY THROUGH THIS REFUND ANTICIPATION LOAN.
IF YOU DO TAKE OUT THIS REFUND ANTICIPATION LOAN, YOU CAN EXPECT TO RECEIVE YOUR LOAN IN APPROXIMATELY ONE TO TWO DAYS.
IF YOU DO NOT TAKE OUT THIS REFUND ANTICIPATION LOAN, YOU CAN STILL RECEIVE YOUR TAX REFUND QUICKLY. IF YOU FILE YOUR TAX RETURN ELECTRONICALLY AND RECEIVE YOUR TAX REFUND THROUGH THE MAIL, YOU CAN EXPECT TO RECEIVE YOUR REFUND IN APPROXIMATELY 15 TO 22 DAYS. IF YOU FILE YOUR TAX RETURN ELECTRONICALLY AND HAVE YOUR TAX REFUND DIRECTLY DEPOSITED INTO A BANK ACCOUNT, YOU CAN EXPECT TO RECEIVE YOUR REFUND IN APPROXIMATELY EIGHT TO 15 DAYS.
In addition, the following disclosure must be made to the consumer, in writing, in both English and Spanish, in connection with the RAC, in a form separate from the RAC and from the application, and containing a legend, centered in bold, capital letters and in eighteen-point type stating: NOTICE; and stating the following language in at least fourteen-point type:
YOU ARE PAYING [insert the amount of the fee] TO GET YOUR REFUND CHECK THROUGH [insert name of issuer of refund anticipation check]. YOU CAN AVOID THIS FEE AND STILL RECEIVE YOUR REFUND IN EIGHT TO 15 DAYS BY HAVING THE IRS DEPOSIT YOUR REFUND DIRECTLY INTO YOUR OWN BANK ACCOUNT OR IN 15 TO 22 DAYS BY HAVING THE IRS MAIL THE CHECK.
It shall be the obligation of the tax preparer or facilitator to complete the required disclosure accurately and thoroughly; and to ensure that the completed disclosure form is signed by the consumer before the consumer consummates the RAL and/or RAC transaction.
Posting of fee schedule and disclosures.
Every tax preparer and facilitator who offers RALs and RACs shall display a current fee schedule for RALs and RACs and for the electronic filing of the consumer's tax return.
Every tax preparer and/or facilitator who offers RALs and RACs shall also prominently display on each fee schedule:
A legend, centered in bold, capital, one-inch letters stating:
NOTICE CONCERNING REFUND ANTICIPATION LOANS
The following verbatim statement in letters of at least twenty-eight-point type:
"When you take out a refund anticipation loan, you are borrowing money against your anticipated tax refund. If your tax refund is less than expected, you must still repay the entire amount of the loan, which includes interest and fees. If your refund is delayed, you may have to pay additional costs. Again, these costs may be more than the amount of your tax refund. You can have your tax return filed electronically and your refund directly deposited into your own bank account without obtaining a loan or paying fees for this extra service."
The postings required by this section shall be made on a document measuring no less than 16 inches by 20 inches. The postings required in this section shall be displayed in a prominent location at each office where the tax preparer or facilitator is processing the RALs and/or RACs.
The Director of the Suffolk County Office of Consumer Affairs is hereby authorized and empowered to issue and promulgate such rules and regulations as he or she deems necessary to implement and carry out the provisions of this article.
This article shall be null and void on the day that statewide or federal legislation goes into effect, incorporating either the same or substantially similar provisions as are contained in this article, or in the event that a pertinent state or federal administrative agency issues and promulgates regulations preempting such action by the County of Suffolk. The County Legislature may determine via mere resolution whether or not identical or substantially similar statewide legislation has been enacted for the purposes of triggering the provisions of this section.
This article shall apply to all actions occurring on or after the effective date of this article.