Council OKs tax prep bill to protect consumers

Transparency on fees among requirements

With Americans now beginning their annual reconciliation with the IRS, city leaders are turning their attention to predatory practices in the taxpreparation industry.

The Albuquerque City Council on Monday voted 8-0 to pass legislation requiring a new level of transparency from paid tax preparers who are not licensed attorneys or Certified Public Accountants. Such providers will have to detail their fees up front and provide written service estimates; tell consumers about their educational attainment and tax-prep experience; and provide a copy of a “consumer bill of rights” created by the city in both English and Spanish. They must also alert potential clients that they may be able to file their taxes online at no cost or may qualify for free tax preparation assistance offered by nonprofit organizations.

The ordinance — sponsored by Councilor Pat Davis at Mayor Tim Keller’s request — also requires disclosures related to “refund anticipation” advances or loans. A preparer offering such products must tell the client applying how much of their expected refund they will ultimately receive once all fees are deducted.

“Whether we’re in a pandemic or not, no one in Albuquerque should be worried about losing their hard-earned tax refunds to a scam,” Keller said in a written statement. “We worked with Council to pass this ordinance so our families can get the information they need up front to protect the money they rely on to make ends meet.”

Davis said 2020’s financial challenges lent the legislation even more urgency.

“I think it’s more important than ever that people understand their basic rights and as a city we can do our part to be sure our most vulnerable get as many of their dollars back in their pocket as possible,” he said prior to the vote.

Karen Meyers, who heads the city’s Consumer Financial Protection Initiative, said the city has heard various community complaints about tax preparation, including that some preparers are charging high fees for even simple returns.

“What this (ordinance) says is ‘You need to be up front and tell people how much you’re going to charge them, so people can make a choice,’ ” Meyers told the council.

Councilor Klarissa Peña attempted to delay a vote on the ordinance, calling the legislation important but saying she wanted to give the industry more time for feedback.

“Hearing from some people in the field, I think it would just behoove us just to be able to get some more input and ensure we’re doing this correctly,” Peña said.

But Meyers noted that the legislation already had been posted for two months and time was of the essence given the start of tax season. She said the city has a letter about the new requirements ready to send to local tax preparers, plus educational information ready to distribute and post online.

Peña’s motion to delay action until Feb. 17 failed on a 1-7 vote, and she ultimately joined the rest of the councilors — except Don Harris, who was not in attendance — in voting for the bill.