[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.]
[Adopted 4-5-2005 by L.L. No. 13-2005 (Ch. 461 of the 1985
Code)]
A.
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.
B.
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.
C.
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.
D.
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.
E.
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.
F.
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).
G.
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).
H.
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.
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.
A check or other payment mechanism:
Representing the proceeds of the consumer's tax refund
less application fees;
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
For which the consumer has paid a fee or other consideration
for such payment mechanism.
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.
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.
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.
A.
Refund anticipation loans.
(1)
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.
(2)
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:
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THIS IS A LOAN.
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SPECIFICALLY, THIS IS A REFUND ANTICIPATION LOAN.
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YOU ARE NOT REQUIRED TO ENTER INTO THIS REFUND ANTICIPATION
LOAN AGREEMENT MERELY BECAUSE YOU HAVE RECEIVED THIS INFORMATION.
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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.
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IF YOU DO NOT TAKE OUT THIS REFUND ANTICIPATION LOAN, YOU ARE
ELIGIBLE TO RECEIVE A GROSS TAX REFUND OF APPROXIMATELY $ [insert
amount].
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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.
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IF YOUR REFUND IS DELAYED, YOU MAY HAVE TO PAY ADDITIONAL FEES
AND INTEREST.
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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.
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IF YOU DO TAKE OUT THIS REFUND ANTICIPATION LOAN, YOU CAN EXPECT
TO RECEIVE YOUR LOAN IN APPROXIMATELY ONE TO TWO DAYS.
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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.
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(3)
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:
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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.
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(5)
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.
B.
Posting of fee schedule and disclosures.
(1)
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.
(2)
Every tax preparer and/or facilitator who offers RALs and RACs shall
also prominently display on each fee schedule:
(a)
A legend, centered in bold, capital, one-inch letters stating:
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NOTICE CONCERNING REFUND ANTICIPATION LOANS
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(b)
The following verbatim statement in letters of at least twenty-eight-point
type:
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"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."
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(3)
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.
