Mineola, NY— Nassau County Executive Thomas R. Suozzi, joined by Nassau County Legislator Craig Johnson (D-Port Washington), and Commissioner of Consumer Affairs Roger Bogsted, today signed into effect a new local law that will go a long way in protecting Nassau County consumers.

The new law will require that all tax preparers, including individuals or companies, disclose all fees for Refund Anticipation Loans (RAL). Many tax preparers offer a loan on a client’s anticipated tax refund in as little as one day. But while this claim made by many tax service preparers may be true, it doesn’t tell the whole story, according to County Executive Suozzi, Legislator Johnson and Commissioner Bogsted.

“This law is an important step in protecting Nassau County consumers from being misinformed when seeking tax refunds,” County Executive Suozzi said. “A consumer can make a solid decision without being taken advantage of now that all tax preparers are required to be upfront with all costs and fees associated with a Refund Anticipation Loan.”

“The terms for Refund Anticipation Loans can be misleading,” says Legislator Johnson, chairman of the Finance Committee. “These ‘loans’ come at a high price. Often the tax preparers do not disclose complete and accurate information to consumers concerning the interest and fees charged. The consumer can end up coming away with just a fraction of their full refund after the fees are subtracted.”

In addition, the loan interest and fees are charged against the refund to which the consumer is entitled. Frequently, consumers who utilize these types of tax services are unaware that they are entitled to their full refund through the IRS or the state, provided they wait the processing period.

The Refund Anticipation Loan legislation was recently approved unanimously by the Nassau County Legislature. At today's announcement, County Executive Suozzi signed the bill into law, which becomes effective immediately.

This new consumer protection law requires that:

• Before a consumer enters into a RAL transaction, the tax preparer must disclose in both English and Spanish, and in a form separate from the application, that "this is a loan."
• The consumer must be told that he or she is not required to enter into the refund anticipation loan agreement.
• The consumer must be told that even if they do not get back the anticipated amount in their tax refund, they are still liable for the repayment of the loan.
• The consumer must be told that even if they choose not to take the loan, they can still receive their refund in a timely manner by filing electronically and receive a refund through the mail. The consumer can avoid this fee and still receive a refund in as few as 10 days by having the IRS deposit the refund check in a bank account, or wait for the IRS to mail a check. If they do not have a bank account, they must be told that they may wish to consider obtaining one.
• The tax preparer must also provide an oral explanation in addition to the written explanation.

According to reports, the Refund Anticipation Loans drain billions from the pockets of American consumers. Tax preparers and facilitators of these transactions often target the working poor who receive the Earned Income Tax Credit. In 2002, 55 percent of those consumers who received RAL's also received the EITC. These loans cost American workers $1.14 billion in loan fees, plus an additional $406 million in other fees.

"Under the new law, any violator could be subject to an initial fine up to $500, and up to $750 for a second violation. The Office of Consumer Affairs will strictly enforce this law," stated Commissioner Bogsted.

For more information please call the Office of Consumer Affairs at 516-571-3284.