How would you feel if a tax preparer you hired was not willing to tell you their qualifications or experience, or give you an estimate of how much it would cost, or charged you an excessive fee for a simple return, or filed your return without you having a chance to review it, or had you sign a blank return?
You would be outraged and expect the law to protect you against these practices.
These are unfair practices that the City Council intended to eliminate when they unanimously passed the Tax Preparers and Consumer Rights Ordinance in February 2021. These are also the problems identified in community roundtables held by the city’s Consumer Protection Initiative in 2019. This ordinance requires tax preparers to provide customers with information fundamental to understanding any tax preparation service, including an estimated fee disclosure and the education and qualifications of the tax preparer. The ordinance also provides for a “bill of rights” disclosure – including the right to an explanation if charges exceed the estimate, the right to review the tax return before it is filed, and the right to receive any refund directly into the taxpayer’s bank account. These are basic protections for taxpayers who pay a tax preparer to prepare their tax return.
However, some of the tax preparation companies do not want to be bound by consumer protections and have been working to repeal or gut this ordinance. H&R Block and an industry association of large tax preparers hired high-paid lawyers to defeat it. First, they persuaded Councilor Pat Davis to propose a resolution that prohibited the city from taking action to enforce the protections. Now an industry-drafted “replacement” ordinance is being considered. It deletes the “consumer rights” title of the ordinance and almost all of the protections for consumers – leaving it an empty shell that does not protect consumers and restricts the ability of the city and consumers to enforce the law or seek a remedy if violations occur.
Here are some of the rights the proposed replacement ordinance will eliminate:
• No right to have the tax preparer’s education and qualifications disclosed.
• No right to an estimate of fees disclosed.
• No right to an explanation for charges that exceed the estimate.
• No right to review the tax return before it is filed.
• No right to receive refunds directly.
• No right to a written agreement.
• No protections against false and misleading statements.
In addition, Davis’ proposed “replacement” ordinance will limit the ability of the city or the taxpayer to enforce the ordinance and seek fines or other remedies for violations.
National experts recognize consumer protections are needed to stop unfair and misleading practices in the tax preparation industry. “Tax time is usually a challenge for low-income and other vulnerable taxpayers, and when consumers don’t have adequate information to shop around, abusive pricing schemes proliferate,” says Michael Best of the National Consumer Law Center. Unfortunately, federal and state law do not provide sufficient protections. The city took action to protect taxpayers and passed an effective ordinance. It is time for the city and City Council to affirm these protections, not gut them.
Karen Meyers is a former director of the Albuquerque Consumer Protection Initiative and a former director of the Consumer Protection Division within the New Mexico Attorney General’s Office.