Senate Commerce Committee Statement - Senate Bill No. 4240, New Jersey (December 6, 2021)

Summary

Senate Commerce Committee statement to Senate, No. 4240, State of New Jersey, dated December 6, 2021, reporting favorably Senate Bill No. 4240. The bill prohibits tax preparers from engaging in certain practices involving refund anticipation checks and loans. Tax preparers would be prohibited from requiring clients to enter into a refund anticipation check agreement to complete a tax return, and from using terms such as free, no cost or no fee in certain circumstances. Tax preparers will be required to provide an itemized statement of any service charges or fees, and violators will be subject to the Consumer Fraud Act.

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     SENATE COMMERCE COMMITTEE

                   STATEMENT TO

                 SENATE, No. 4240

 STATE OF NEW JERSEY
                  DATED: DECEMBER 6, 2021

    The Senate Commerce Committee reports favorably Senate Bill
No. 4240.
   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.


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