FOR IMMEDIATE RELEASE: February 20, 2009

CONTACT: Sebastian D’Elia, 908-527-4419
Tina Casey, 908-527-4346




Elizabeth, NJ – In a recent enforcement sweep conducted with state officials, the Union County Division of Consumer Affairs inspected 70 businesses in the county that advertised “same-day” tax refunds.  Six were later cited for failing to disclose that the advertised service was actually a high-interest loan.

The deceptive advertisements appeared in storefront signs, posters, and flyers.  They included the words “instant” or “same day,” or they specified a time frame such as “1-Day” or “2-Day.”

“There is no such thing as a same-day tax refund, a one-day refund, or even a seven-day refund.  It’s simply not possible,” said Union County Freeholder Chairman Alexander Mirabella.

The quickest refund takes at least eight days.  That occurs when the taxpayer submits an electronic form to the I.R.S., and the refund is direct-deposited to the taxpayer’s bank account.

The fraudulently advertised “refunds” do not come from the I.R.S.  They are loans that tax preparers make to their clients.  These are called Refund Anticipation Loans [RALS].

RALs are legal, but the tax preparer must clearly disclose that the service is a private loan, not a government tax refund.  Even with proper disclosure, consumers are advised to stay far away from these loans.  They are considered predatory because of excessive interest rates ranging up 500%, hidden fees, and potential for abuse.  Many are targeted to low-income workers who qualify for the Earned Income Tax Credit.

RALs are often associated with fly-by-night storefront operations, but they are also offered by major banks and national tax preparation chains.

“There is no reason to let these predators dip into your pocket,” said Mirabella.  “Every penny of your refund should be yours.”

For questions about tax preparers or suspected scams, call the Union County Division of Consumer Affairs at 908-654-9840.