S891

An Act concerning tax refund anticipation loans and checks, and amending and supplementing P.L.2007, c.258 (C.17:11D-1 et seq.).

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 1 of P.L.2007, c.258 (C.17:11D-1) is amended to read as follows:

As used in this act:

"Client" means an individual who engages the services of a tax preparer.

"Commissioner" means the Commissioner of Banking and Insurance.

“Refund anticipation check” means a check, stored value card, or other payment mechanism representing the actual or anticipated proceeds of the client’s federal or State income tax refund which was issued by a depository institution, tax preparer, or other person that received or anticipates receipt of a direct deposit of the client’s federal or State income tax refund and for which the client has paid a fee or other consideration for such payment mechanism.

"Refund anticipation loan" means a loan that is secured by, or that the tax preparer anticipates from, a client's federal or State income tax refund.

"Tax preparation services" means services provided for a fee or other consideration to a client to:

(1) assist with preparing or filing State or federal individual income tax returns;

(2) assume final responsibility for completed work on an individual income tax return on which preliminary work has been completed by another; or

(3) offer, facilitate, or make refund anticipation loans or checks.

"Tax preparer" means an individual, corporation, partnership, limited liability company, association, trustee or other entity who provides tax preparation services.

(cf: P.L.2007, c.258, s.1)

2. Section 2 of P.L.2007, c.258 (C.17:11D-2) is amended to read as follows:

2. No tax preparer shall:

a. Without reasonable cause, fail to promptly, diligently and without unreasonable delay complete a client's tax return;

b. Obtain the signature of a client to a tax return or authorizing document containing blank entries to be completed after the document has been signed;

c. Fail to sign a client's tax return as the tax preparer;

d. Fail or refuse to give a client a copy of any document requiring the client's signature within a reasonable time after the client signs the document;

e. Fail to retain for at least four years a copy of individual income tax returns;

f. Fail to maintain a confidential relationship with a client or former client;

g. Fail to take reasonable measures to maintain the confidentiality of information or documents provided by the client;

h. Produce, authorize, publish, disseminate, circulate, or cause to make any false, deceptive, or misleading statement or representation relating to or in connection with the offering or provision of tax preparation services;

i. Require a client to enter into a refund anticipation loan or refund anticipation check agreement in order to complete a tax return;

j. Claim, or make representations to a client concerning, credits or deductions for which the tax preparer knows or reasonably should know the client does not qualify;

k. Charge, offer to accept, or accept a fee based on a percentage of an anticipated refund in exchange for tax preparation services; [or]

l. Withhold or decline to return to a client documentation provided by the client for use in preparing a client's tax return; or

m. Provide, offer, or advertise refund anticipation loan or check services using terms such as “free,” “no cost,” “no fee,” or other language that would lead a client to reasonably believe that the refund anticipation loan or refund anticipation check is provided at no cost to the client if the issuance of a refund anticipation loan or refund anticipation check results in, or is predicated upon, the assessment of higher or additional fees for other tax preparation or other services than are charged to clients who do not receive refund anticipation loan or refund anticipation check services.

(cf: P.L.2007, c.258, s.2)

3. Section 4 of P.L.2007, c.258 (C.17:11D-4) is amended to read as follows:

4. A tax preparer shall provide an itemized statement of all service charges and fees to the client, including, but not limited to, charges for each of the following:

a. tax return preparation;

b. electronic filing of a tax return; [and]

c. providing or facilitating a refund anticipation loan or refund anticipation check; and

d. interest, including the estimated amount of interest in the event a refund is delayed, under the terms and conditions of a refund anticipation loan or refund anticipation check.

(cf: P.L.2007, c.258, s.4)

4. (New section) It shall be an unlawful practice and violation of P.L.1960, c.39 (C.56:8-1 et seq.) for a tax preparer to violate any provision of P.L.2007, c.258 (C.17:11D-1 et seq.).

5. This act shall take effect immediately.

STATEMENT

This bill prohibits tax preparers from engaging in certain practices involving refund anticipation checks and loans.

An income tax refund is the largest lump-sum payment that many residents in the State receive in a given year, and many tax preparers take advantage of this fact by offering residents—particularly low-income residents—refund anticipation loans and checks at exorbitant interest rates or with other exploitative practices. Under this bill, tax preparers will be prohibited from requiring clients to enter into a refund anticipation check agreement in order to complete a tax return. Tax preparers will also be prohibited from providing, offering, or advertising refund anticipation loan or check services using terms such as “free,” “no cost,” “no fee,” or other language that would lead a client to reasonably believe that the refund anticipation loan or check is provided at no cost to the client if the issuance of a refund anticipation loan or check results in, or is predicated upon, the assessment of higher or additional fees for other tax preparation or other services than are charged to clients who do not receive refund anticipation loan or check services.

Additionally, tax preparers will be required to provide an itemized statement of any service charges or fees for providing or facilitating a refund anticipation check and any interest charged, including the estimated amount of interest in the event a refund is delayed, under the terms and conditions of a refund anticipation loan or refund anticipation check. Tax preparers who violate any of the provisions of this bill will be subject to the Consumer Fraud Act. As used in this bill, “refund anticipation check” means a check, stored value card, or other payment mechanism representing the actual or anticipated proceeds of the client’s federal or State income tax refund which was issued by a depository institution, tax preparer, or other person that received or anticipates receipt of a direct deposit of the client’s federal or State income tax refund and for which the client has paid a fee or other consideration for such payment mechanism.