Repeals provisions of the tax law to remove prohibition on tax return preparers or facilitators operating in same premises as licensed check cashers

BILL NUMBER:S7002

Title of bill

An act to amend the tax law, in relation to removing the prohibition on tax return preparers or facilitators operating in the same premises as licensed check cashers and to repeal subparagraph (G) of paragraph 1 of subsection (f) of section 32 of such law relating thereto

Purpose

To remove the prohibition against tax return preparers or facilitators operating on the same premises as licensed check cashers, contained in Section 32 of the New York Tax Law.

Summary of provisions

Section 32 (f)(1)(G) is amended to delete the prohibition against tax return preparers or facilitators operating on the same premises as licensed check cashers.

Justification

This bill corrects an overbroad and unjustified provision within the New York Tax law, which prohibits tax return preparers and facilitators from operating within the same premises as licensed New York check cashers. Currently, the Tax Law prohibits registered tax return preparers and facilitators from referring, facilitating, soliciting consumers or conducting business on behalf of, or in conjunction with, or on the same premises as a third party engaged in check chasing for a fee. This provision became part of the Tax Law in 2009 as part of the Executive Budget, Chapter 59 of the Laws of 2009, at a time when the Department of Taxation and Finance was seeking to regulate tax return preparers, refund anticipation loans ("RALs") and refund anticipation check ("RACs"). However, the law had the unintended consequence of restricting legitimate tax return preparation businesses who established temporary tax preparation facilities in the premises of licensed check cashers.

Check cashers are licensed and regulated by the NYS Department of Financial Services. Prohibiting tax return preparers and facilitators from locating in licensed check cashers in no way furthered the purposes of regulating the tax preparation business and had the unintended consequence of prohibiting the locating of tax preparers in facilities, i.e., licensed check cashers, where millions of low-and-moderate-income New Yorkers conduct their financial transactions in a regulated environment.

Furthermore, the measure was contrary to the intention of the NYS Legislature in enacting the Preamble to L.1994, c.546, January 12, 1993 (NYS Banking Law, Article 9-A, Section 369), provides that: "check cashers provide important and vital services to New York citizens; that the business

of check cashers shall be supervised and regulated through the banking department in such a manner as to maintain consumer confidence in such business and protect the public interest; that the licensing of check cashers shall be determined in accordance with the needs of the communities they serve; and that it is in the public interest to promote the stability of the check cashing business for the purpose of meeting the needs of the community that are served by check cashers."

Therefore, the Legislature determines that the prohibition against tax preparers and facilitators locating in the premises of licensed check cashers does not further the intention of New York Tax Law, is contrary to the intent and purpose of the New York Banking Law, and has the unintended consequences of restricting legitimate, licensed business activity that provides regulated financial services to millions of New Yorkers and, therefore, Section 32 (f)(1)(G) of the Tax Law should be amended.

Legislative history

New bill.

Fiscal implications

None.

Effective date

Immediately.