Background


Arkansas (AR), Connecticut (CT),  Illinois (IL), Maine (ME), Maryland (MD), and New York (NY) have added regulations to prevent preparers from charging extra fees to taxpayers opting to use a bank product to receive payment of their tax refund. More details on the regulations are provided below. In short, tax preparers and bank product facilitators in these states must charge the same fees to all taxpayers. In response to these regulations, the Drake Software program is applying certain charges on the client bill to ALL taxpayers, whether or not they have opted for a bank product. These fees, which are shown in the Miscellaneous section of the bill, include the following:

    • Software fees
    • Franchise/network fees (indicated in Setup > Firm)
    • Additional (Add-On) fees (indicated in Setup > Firm)


On bank product returns, these fees are withheld from the refund and distributed accordingly by the bank. On non-bank product returns, the preparer is responsible for charging and collecting the fees**.



Note:

** The preparer keeps any fees collected from taxpayers who do not apply for a bank product, including the software fee.



Choosing this option


If you choose this option, you are indicating that you want the same functionality mentioned above; in essence, you intend to abide by these regulations even though they may not apply to you based on the location of your business.



Note:

The Financial Product Assistance Fee (item #212 in Setup > Pricing) is not charged on the bill if this option is marked. The state regulations, on which this is based, indicate that taxpayers choosing bank products are not to be charged additional fees specific to facilitating the bank product. Therefore, this fee cannot be charged when conforming to these regulations.



Brief Summary of These States’ Fee Regulations


ARKANSAS


A.C.A. § 4-116-107 provides:

    • A Tax preparer may not, charge or impose any fee, or charge or require other consideration in the making or facilitating of a refund anticipation check apart from the fee charged by the creditor or bank that provides the check.
    • A tax preparer may not, directly or indirectly, arrange for any third party to charge an interest, fee, or charge related to a refund anticipation check, other than the refund anticipation check fee imposed by the creditor including without limitation charges for insurance, attorney's fees, other collection costs, or check.
    • This fee may include fees for tax return preparation.
    • Directly or indirectly arrange for any third party to charge an interest, fee, or charge related to a refund anticipation loan or refund anticipation check, other than the refund anticipation loan or refund anticipation check fee imposed by the creditor including without limitation charges for insurance, attorney's fees, other collection costs, or check.


This section does not prohibit the charge or fee imposed by the facilitator to all of its customers if the same fee in the same amount is charged to customers who do not receive refund anticipation checks or other tax related financial products.


     CONNECTICUT


Conn. Pub. Acts 17-147,  § § 15-18


All tax preparers and facilitators are prohibited in connection with refund anticipation loans and refund anticipation checks:

    • Imposing any fee for making or facilitating a refund anticipation loan or refund anticipation check.  The creditor or bank that originated the loan or check may charge a fee, but the preparer may not impose a fee or other consideration.
    • Arranging, directly or indirectly, for any third party to impose any interest, fee, or charge related to a refund anticipation loan, or refund anticipation check, other than the creditor or bank that originated the loan or check.
    • Including any of the following provisions in any document related to a refund anticipation loan or refund anticipation check:
      • A hold harmless clause;
      • A confession of judgement clause;
      • An assignment of or order for payment of wages or other compensation for services;
      • A waiver of any provision in the federal or Connecticut Taxpayer Bill of Rights; or
      • A waiver of the right to injunctive, declaratory, other equitable relief, or relief on a class-wide basis.
    • Engaging in any unfair or deceptive acts or practices in making or facilitating a refund anticipation loan or refund anticipation check. This prohibition includes making any statement, written or verbal, that contradicts any information in the federal or Connecticut Taxpayer Bill of Rights.
    • Taking or arranging for a creditor to take a security interest in any property interest of the taxpayer other than the proceeds of the tax refund to secure payment of a refund anticipation loan.
    • Engaging in the collection of an outstanding or delinquent refund anticipation loan for any creditor or assignee.


MAINE


Me. Rev. Stat. Ann. tit. 9-A, § 10-310


A facilitator of a refund anticipation check is prohibited from engaging in any of the following activities:

Assessing or imposing any fee, charge or other consideration in the making of a refund anticipation check unless that fee, charge, or other consideration is included in the disclosed fee charged by the creditor or bank that provides the check. In addition, any such fee, charge, or other consideration, from whatever source, must be disclosed on the written agreement required by section 10-302. A facilitator of a refund anticipation check may charge a fee for tax preparation if the same fee in the same amount is charged to customers who do not receive a refund anticipation check or any other tax related financial product.


MARYLAND


MD Code, Commercial Law, § 14-3806


A facilitator may not:

    • Require a consumer to enter into an agreement in order to complete a tax return.
    • Charge any fee to a consumer or require any other consideration for making or facilitating a refund anticipation check other than the fee imposed by the creditor or other person that provides the refund anticipation check.
    • Engage in a transaction, practice, or course of business that operates a fraud on a consumer in connection with a refund anticipation check, including making oral statements that contradict any of the information required to be disclosed under this subtitle.
    • Arrange, directly or indirectly, for any third party to charge any interest or fee related to a refund anticipation check, other than the refund anticipation check fee imposed by the creditor, including charges for insurance, attorney's fees, collection costs, or check cashing.
    • Misrepresent a material fact or condition of a refund anticipation check, or fail to process an application promptly after the consumer applies


Subsection (a)(2) of this section does not prohibit a charge or fee, including a fee for tax return preparation, that is imposed by a facilitator on all of its customers if the same charge or fee, in the same amount, is imposed on customers who do not receive refund anticipation checks or other tax related financial products.


NEW YORK


N.Y. Tax Law § 32


A tax return preparer or facilitator shall not:

    • Charge or impose any fee, charge or other consideration in the making or facilitating of a refund anticipation check apart from the fee charged by the creditor or bank that provided the check.
    • Engage in unfair or deceptive acts or practices in the facilitating of a refund anticipation check, including making any oral statements contradicting any of the information required to be disclosed under the Taxpayer Bill of Rights as set forth in sections three hundred seventy-one through three hundred seventy-three of the general business law.
    • Directly or indirectly arrange for a third party to charge any interest, fee, or charge related to a refund anticipation check.