Tax Day 101: Say no to RALs and RACs

Cyril Josh Barker | 3/28/2019, midnight
With Tax Day (Monday, April 15) just weeks away the Department of Consumer Affairs is encouraging New Yorkers who earned ...

With Tax Day (Monday, April 15) just weeks away the Department of Consumer Affairs is encouraging New Yorkers who earned $66,000 or less in 2018 to file for free using NYC Free Tax Prep available at more than 150 sites citywide or online.

“Thousands of New Yorkers have already used NYC Free Tax Prep this season to file their tax returns,” said DCA Commissioner Lorelei Salas. “As Tax Day quickly approaches and with a lot of uncertainty this tax season, we encourage all eligible New Yorkers to use our services to file their taxes safely and for free. Our IRS certified VITA/TCE volunteer preparers can help New Yorkers understand their tax return and how the new law affects them.”

NYC Free Tax Prep services include more than 150 Volunteer Income Tax Assistance/Tax Counseling for the Elderly and AARP Tax-Aide sites citywide, as well as online self-preparation at nyc.gov/taxprep.

Consumers using a paid preparer should ask the preparer for a Consumers’ Bill of Rights Regarding Tax Preparers and read it thoroughly before having their taxes prepared, and also get DCA’s Tips Regarding Tax Preparers. Officials are warning against refund anticipation loans.

Due to federal law, the PATH Act, the Internal Revenue Service was required to hold refunds until at least February 15, 2019, for filers who claim EITC or the Additional Child Tax Credit. Most refunds were issued in approximately 21 days from mid-February, which is almost three times as long as previous years.

Paid preparers continue marketing refund anticipation checks and refund anticipation loans that result in a smaller refund, or unforeseen fees or interest. In January, the DCA warned New Yorkers about predatory tax preparer tactics.

A March 2016 National Consumer Law Center report noted that RACs generally cost $25 to $60 for the federal refund. Although RACs are not typically considered loans, it should be noted that if a taxpayer pays $35 to defer payment of a $350 tax preparation fee for three weeks, the interest rate would be equivalent to 174 percent.

“Let’s face it—tax season is stressful for just about everyone,” said Council Member Rafael Espinal. “For low-income people working to feed themselves and their families in a city where the cost of living has skyrocketed, that stress is even more acute. Fortunately, the Department of Consumer Affairs is ready to help New Yorkers get the refunds they are entitled to, so they can effectively plan for their financial future.”

New Yorkers can call 311 or visit nyc.gov/taxprep and use DCA’s interactive map to search for the most convenient free tax site, or text “Taxes” to 42033 (message and data rates may apply) to find the nearest location and receive tax season updates and reminders. A checklist of what is needed to file is available at nyc.gov/taxprep.