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Massachusetts Compliance Information
for Tax Preparers
As a user of CrossLink, we are providing this information to you so that you may ensure you are complying with your state licensing consumer protection laws. If you offer RALs to your clients, you may be required to be licensed by the state of Massachusetts as a Small Loan Company. This is in addition to any other registration requirements that might be applicable.
Who must be Licensed?
A tax preparer who directly or indirectly engages in obtaining an RAL for their clients in the state of Massachusetts must be licensed if the interest and all expenses on that RAL aggregately exceed an APR of 12%.
What are the Requirements to become Licensed?
A signed, notarized application must be filed with the Division of Banks containing detailed information concerning all of the following: financial responsibility, financial statements, character and fitness, business experience, and other pertinent information required by the Commissioner of Banking. A supplementary application must be submitted if you have more than one location that will be operating under the same license. Also, if you hold any licenses in other states, you must submit that information with your application on a form granting permission for the other state’s licensing agency to give the state of Massachusetts any requested information. An initial investigation fee of $115 must be sent with the application, and once the license is granted, an additional $600 license fee is due.
What Additional Requirements Apply?
A complete record of books, accounts and important documents must be kept that would allow the Commissioner to determine whether you are complying with all applicable state and federal laws. Additionally, a complete customer account history must be kept including the terms and conditions of the loan, agreement, payment dates, pay off dates, refunds, refinancing date, and any collection or legal action taken. These records must be capable of being accessed within 72 hours notice, and must be kept within the state of Massachusetts unless prior approval of a written plan has been extended.
A maximum interest rate of 23% per year can be charged for the financing of the loan, and a maximum administrative fee of $20 can be charged for granting the loan. Any other charges besides the administrative fee, including service and transaction charges are considered financing charges, with the exception of an application fee that is paid by all clients regardless of whether the loan is approved.
A written disclosure of the periodic rate of the finance charges and the annual percentage rate, along with the date the finance charges begin to accrue, must be provided to the client in a format which the client can keep. A statement of billing rights outlining both the client’s rights and your rights must also be included. The required disclosures must be kept separate from all other paperwork the client receives. You need to retain records showing your compliance with these requirements for at least two years. These disclosure statements are provided with your CrossLink program.
This is only a brief description of the primary requirements of a licensed Small Loan Company. Please consult with an attorney or the Massachusetts’ Consumer Affairs and Business Regulation office for a thorough list of requirements based on your own unique situation to ensure your compliance with Massachusetts laws and regulations.
What Do I Need to Do?
Visit the Massachusetts’ Consumer Affairs and Business Regulation’s Finance Companies website.* This site provides the forms you will need to submit, along with the address and other important information.
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