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Court: Tax preparer can’t be sued for credit violations

BOSTON, MA — A tax preparer that arranges refund anticipation loans for its customers is not subject to state disclosure requirements applicable to credit services, the Court of Special Appeals has ruled in affirming the Montgomery County Circuit Court’s dismissal.

The plaintiff obtained a $2,200 refund anticipation loan when Jackson Hewitt prepared her federal tax return. Alicia Gomez applied $284 from the loan to pay for Jackson Hewitt’s tax preparation fee.

Gomez thereafter sued Jackson Hewitt under a state law governing “credit services,” alleging that the company violated the statute by failing to provide her with required disclosures when it arranged her loan with a lender.

But the intermediate appellate court decided that the law was directed at credit repair companies and did not apply to tax preparers like Jackson Hewitt.

The court explained that the statute “defines a credit services business as ‘any person who, with respect to the extension of credit by others, sells, provides, or performs, or represents that such person can or will sell, provide, or perform, any of the following services in return for the payment of money or other valuable consideration.’ …

“The words ‘in return’ suggest that the business to which the statute applies will receive payment from the consumer for the credit services, here, the extension of credit. [Jackson Hewitt] sells a service — income tax preparation — and that is the only service that [the plaintiff] paid [Jackson Hewitt] to perform.”

A state court in Missouri has reached the opposite conclusion in a similar lawsuit against Jackson Hewitt.

The Maryland case is Gomez v. Jackson Hewitt, No. 1074, Sept. Term 2009.