NEW YORK (CBSNewYork) — Mayor Michael Bloomberg is warning New Yorkers to be on guard against unqualified tax preparers and refund schemes revealed in a recent undercover investigation.

During an inspection of more than 1,200 tax preparers across the city, 1 in 3 were found to be misrepresenting qualifications, violating consumer rights and illegally advertising instant or rapid refunds.

Bloomberg said the so-called rapid refunds were nothing more than high interest loans that could wind up costing people a small fortune, 1010 WINS’ Stan Brooks reported.

1010 WINS’ Stan Brooks hears more about the investigation from Mayor Bloomberg

“What they’re really doing is they’re offering you a loan that can carry very steep interest rates. Sometimes these things have annual rates of something like 500 percent a year,” the mayor said.

The Department of Consumer Affairs focused their investigation on preparers charged with violations in 2009 and 2010 in addition to businesses near immigrant communities. A higher concentration of the violations were found in poorer neighborhoods.

Bloomberg’s words of advice were simple: “Stay away from tax preparers who don’t play by the rules.”

The deadline for tax filing this year is April 18. The city has also made a number of low cost tax preparation options available, which can be found here.

Comments (4)
  1. Vicky says:

    Is it just me or is Bloomberg really plowing through everything that’s wrong with New York. I love his work until now and I really think he truly wants to make this city better. First there was the gun control law which would force firearm shops to actually do background checks n.y. on every customer, and now this. He’s hitting all the right buttons up until now, or that’s how I see it anyway.

  2. yossi says:

    I hate it when they take a short term loan, say two weeks, that charges 10% fee, and then they say well if you are being charged 10% over two weeks, thats like an annual fee of over 260%.. that might be true, but you arent taking out a long term loan, you are taking out a very short term loan. So what do you expect, an annual interest rate of 20%? over a week loan period, that would come out to 0.6 %. so you think its fair that on a $1000, 2 week anticipation loan, they should only charge you 0.6%, or $6???

    Using that same logic when I go to an ATM machine to take out $20 and I am charged a $2 fee… lets do the match, a 5 minute transaction cost me $2, or 10% of my $20 withdrawal, since there are 525,000 minutes in a year, 10% fee for 5 minutes of use would amount to an annual interest rate of over 210,000 %

    do you see the stupidity of critics quoting annual interest rates when we are taking about 2 week loans?

    1. Melissa says:

      If all refunds took two weeks, there would be no need for this article. However, there are many reasons why a refund is held up after the return is filed, sometimes for months and even years. Those people are stuck between a rock and a hard place. You can bet the preparer doesn’t care one bit once that return is filed.

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