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Beware the ‘instant’ tax refund scam, NJ authorities warn

DON’T GET SCAMMED: There’s no such thing as an “instant” tax refund, state Attorney General Paula T. Dow and Thomas R. Calcagni, Acting Director of the State Division of Consumer Affairs, are reminding taxpayers. So don’t get suckered.

Photo Credit: Cliffview Pilot

Their offices, working with individual counties statewide, have been inspecting hundreds of tax preparation agencies to be sure they’re not promising  “instant,” “same day” or “24-hour” tax refunds. Doing so is misleading: The IRS simply can’t issue refunds that quickly.

“The promise of fast cash and an instant refund can be very attractive, especially in times of economic hardship,” Dow said. “But tax preparers who offer so-called same-day refunds are selling something that does not exist, typically at a high cost to the buyer.”

What these agencies give you is a Refund Anticipation Loan, which often comes with high fees and interest rates that snatch a huge chunk of your return from the IRS, she explained.

The Division of Consumer Affairs investigators found nailed five businesses that they charged with consumer fraud:

Girotel NJ, LLC in Union City;
City Tax in Jersey City;
Personal Touch Taxes, LLC in Newark;
Demian and Co., LLC, in Cranford;
MB Motor Sports, Inc., in Tinton Falls.

State authorities are seeking civils fines of $1,500 for each violation, and $250 from each business for the state’s investigative costs.

Calcagni advised taxpayers to “resist the temptation of getting only some of their money today.”

Instead, he said, “they can receive their full refund in just three weeks or less, by filing their tax return electronically and opting for direct deposit to their bank account.”

However, if you must take the RAL, keep some things in mind:

Tax preparers who offer RALs cannot require you to take one;

They must advertise them accurately;

They must provide itemized statements of service charges, including charges for tax return preparation, electronic filing, and providing or facilitating the RAL.

Read the fine print carefully before you sign. Make sure you are given:

* annual percentage rate of the loan;
* schedule of all charges and fees;
* maturity date of the loan;
* list of all charges for electronic filing;
* date or period within which the loan money will be received;
* who repays if the loan exceeds the refund minus interest & fees.

Consumers who have signed up for an RAL without receiving full disclosure of the terms and conditions may file a complaint with the Division of Consumer Affairs at 800-242-5846 (within New Jersey) or 973-504-6200.

Or CLICK: njconsumeraffairs.gov

You can also download: “Refund Anticipation Loans: What Consumers Should Know About ‘Fast’ or ‘Instant’ Refunds.”

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