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Historically deposits are 'nonrefundable' unless stated otherwise under contract. But, because there is no contract, the deposit must be returned as there is no contract or meeting of the minds. The deposit does not have to be returned if it was used in preparation for service. For example, if I as an attorney have a 'handshake deal' with someone to represent them in a matter and receive a retainer, arguably a contract exists, and I can then argue that the retainer is mine to keep. On the other hand, if a tax preparer receives a deposit to work on tax returns but the contract is not signed and tax preparer has done no work toward this service, the deposit should be returned as no work was created in anticipation of this deal.