Tax time provides a great chance for our clients to save

America Saves Week is February 19-26, 2012. To find out more, visit americasavesweek.org.

As we all know, tax time is a great time for our clients to put part of the disposable tax refund into savings for an emergency safety net to be available throughout the year if needed. Unfortunately, many of our clients are unaware of the great opportunities to start saving and use a savings vehicle that will draw interest while sitting in an account for emergencies.

Some of the alarming statistics include:

• 27% of American households are asset poor (households that are not able to live at the poverty level for three months in the absence of income)*
• 43% of American households are liquid asset poor (excludes assets such as a home, business, etc. that can’t be quickly converted to cash)*
• An estimated 9 million households (with 17 million adults) are unbanked**
• In addition to unbanked households, an estimated 21 million households are underbanked**

You can see it’s vitally important that we encourage our clients to invest their tax refund wisely – their tax refund is many times the only chance our clients have to make a significant investment in their savings!

Programs across the country are participating in the Bonds Make it Easy Savings Bonds Campaign, offering their clients the opportunity to purchase savings bonds with all or part of their refund. Savings Bonds which can be purchased through tax preparation on any tax software or opening other types of accounts through Credit Unions or retirement savings plans such as IRAs. There are, of course, many savings vehicles that clients can use to start or enhance their savings.

As we celebrate America Saves Week, make sure your organization has a plan to help your clients move toward self-sufficiency and allow them to meet unexpected life events head on. Saving takes time, effort and a solid plan to get started. To find out how your organization can get involved, visit www.bondsmakeiteasy.org

By Pam Smith, Asset Building Forum Co-Chair and VITA Program Manager for 11 yrs. in Tulsa Oklahoma

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* “Assets and Opportunity Scorecard: A Portrait of Financial Insecurity and Policies to Rebuild Prosperity in America.” Corporation for Enterprise Development 2012.

** FDIC National Survey of Unbanked and Underbanked Households. December 2009.

NCTC Executive Director Jackie Lynn Coleman talks to a reporter about the questionable practices paid preparers sometimes employ

Would it surprise you to hear that there are questionable practices going on at the offices of some paid preparers this tax season? Of course not. But for a couple groups, the media exposure of these practices is really picking up. On Tuesday, NCTC Executive Director Jackie Lynn Coleman went on CBS-Houston to talk about preparers who are using old customer information to file new returns without their permission:But the group getting the most attention seems to be Instant Tax Service. The nationwide group seems to be having different types of “problems” all across the nation.

Here’s a quick rundown of some of the coverage and some of the questionable practices Instant Tax Service customers have been telling the media about:

• In Rochester, NY customers’ refund checks were delayed and some customers were given bad checks. Customers also complained that the company advertised loans up to $1,000 but was only willing to loan smaller amounts, and took tax preparation fees, totaling about $600, out of loans. Said one customer: “They charge you $600 for a $100 loan.”

• In Augusta, GA a customer received a $300 loan from Instant Tax Service with no interest – just tax preparation fees ($558). An employee told her as long as she paid the loan back by Jan. 16, there would be no fee. The customer went to pay back the loan on the 16^th, but the manager told her that her taxes had already been filed. When a local investigative team interviewed the franchise owner, he admitted it was impossible to submit the return until the 17^th.  The Better Business Bureau is now investigating.

• In Charlotte, NC customers gathered outside an Instant Tax Service office after their refund checks were delayed and some bounced. Customers were told to get their refund on Jan. 27, but when they arrived the office “was closed and no one was in the building.” Customers reported paying as much as $800 out of their refunds for tax preparation.

Similar stories have been reported all over the country. We’ve heard from several affiliates that these stories are unfortunately not rare.

What are you hearing? Have you had customers come into your site and find out their tax return was already filed? Let us know in the comments section.

By Dan Fair, Manager of Communications & Member Relations

Chicago Mayor Rahm Emanuel

During a press conference today, Chicago Mayor Rahm Emanuel announced his new proposed ordinance to more closely regulate paid preparers and enhance protections for consumers of these tax services. Citing tax data analysis provided by the National Community Tax Coalition through its Center for Economic Progress affiliate in Illinois, Mayor Emanuel highlighted the dramatic drain predatory practices and refund products have created for Chicago’s low-income working families.

The new ordinance specifically targets the exorbitant fees levied on consumers of paid preparation services while ensuring all clients of these services are provided a clear bill of rights in their native language prior to tax prep. This will help inform clients of exactly what to expect and where to seek help if they believe they are facing unscrupulous practices. Details on the proposed ordinance are available in the full version of the city’s press release, which features CEP President David Marzahl, who helped shape the ordinance.

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NCTC is continuing to expand its policy and advocacy technical assistance efforts on the state and local levels. If your organization would like such assistance for your policy efforts, please contact Holden Weisman, Policy Analyst, at hweisman@tax-coalition.org.

The President's budget sustains VITA grant funding at $12 million

The federal budget process is a drawn-out and difficult affair, especially when there are too few resources to help families who struggle with too many important needs. But Volunteer Income Tax Assistance represented a relatively bright spot Monday in the first public step of Fiscal Year 2013 budget discussions.

The President’s proposed budget for the next year included $12 million for the Community VITA grant program, sticking with the current funding level for crucial, tax-preparation services on which millions of low-income, working families depend.

Admittedly, the true cost of operating Community VITA sites nationwide totals more than a dozen times that amount. And as demands for VITA help are growing, these services are absorbing brutal funding cuts at the state, local and philanthropic levels.

Nonetheless, as many other significant priorities are targeted for cuts, President Obama’s recommendation for steady federal VITA support represents qualified good news. Also in the Good News for Now Department, the President’s FY13 budget proposal would:

• Maintain current funding levels for Tax Counseling for the Elderly services and Low-Income Taxpayer Clinic grants
• Increase the maximum Pell Grant by $85 through the 2014-15 academic year and delay a scheduled increase in the interest rate for federally subsidized student loans

Supporters of these priorities – and the individuals and families whose needs they represent – should brace for another tough year of advocacy work as Congress now takes-up budget negotiations. The last two federal budgets were settled only after contentious talks that dragged months into their new fiscal years, and the next budget could prove no different.

That means the voices of advocates for VITA and other critical services will be no less important in maintaining Congressional backing for tax preparation, asset building, financial education and other supports that families need.

The past year certainly demonstrated that, as the President initially called for VITA funding of only $8 million for FY12 and advocates successfully worked with Congress to hold funding steady at $12 million; those advocacy efforts seem reflected in the President’s welcome, FY13 proposal for VITA.

By Sean Noble, Director of Public Policy & Research

Clients will be filling out postcards all across the nation!

Nothing resonates with legislators quite like client stories. Whether its a single mom trying to save for her kids’ college fund or a family of five just trying to make ends meet, decision-makers need to know the impact VITA and refundable tax credits have on their constituents. That’s why NCTC is launching a client stories campaign and asking you to participate!

What?

NCTC needs you to ask your clients to fill out a simple postcard. These postcards will allow clients to record how they will use their tax refund without including personal information like their name. There will also be space for clients to write about how your tax site has helped them this year. These stories are able to convey the impact of VITA and refundable tax credits far better than a petition.

Who?

Staff, volunteers and taxpayers throughout the country are participating. In short, that means you!

Why?

We know we do great work – VITA programs prepared more than 1.5 million tax returns last year. But legislators and other decision-makers see aggregate numbers all the time. They need to see the impact that VITA and refundable tax credits have, in the taxpayers’ own handwriting. Real stories hit home for legislators, it’s as simple as that!

When?

Now! The 2012 tax filing season.

How?

1. Decide how you can fit the postcard into your tax site’s procedures. The procedure could be as simple as this: While clients are waiting at the tax site, a volunteer can provide them with a hard copy of a postcard to fill out.
2. Let NCTC know if we can mail you copies of the postcard, or an electronic template that you can use to make your own copies.
3. Collect the postcards when they are finished and keep in a secure location. Make a copy to keep—you can use them for local advocacy and client stories.
4. When finished collecting postcards, contact NCTC about mailing hard copies to us.
5. Plan a local event where staff, volunteers and taxpayers deliver the postcards to the office of your local elected officials. We can help you with ideas!

Please email Gail Parson at NCTC (gparson@tax-coalition.org) to place an order for postcards. We need to get your order by February 17th, 2012.

By Gail Parson, Manager of Civic Engagement

The second annual State of the Field Report

If you’re like us, tax season has completely consumed you. And if you’re reading this, you’ve probably only got a few minutes before something else pops up – just enough time to think about 2011 and all we’ve done together.  NCTC is proud to release our 2011 State of the Field Report, highlighting the success our field shared together last year.

More than ever, our members in the community tax preparation and asset building field have collectively improved the lives of our clients. Whether preparing a simple tax return, opening a bank account, filling out a FAFSA or screening for benefit eligibility, each and every client is closer to financial stability than when they walked in the door.

Despite the overwhelming challenges, we improved in nearly every conceivable category. Consider that in 2011 VITA programs:

• Had more than 52,000 volunteers (up from last year)
• Prepared more than 1.5 million returns (up from last year)
• Prepared returns that lead to more than $2.4 billion in refunds (up from last year)

NCTC and its members also expanded and enhanced its presence in Washington, DC, taking part in more than 150 meetings with members of Congress in 2011.  Protecting low-income working families is a tough task – and our advocacy team has developed the relationships to make sure our field’s voice is heard loud and clear when considering legislation that will affect our clients.

Other highlights from the State of the Field Report:

• NCTC membership grew by 10%
• Updates from each of NCTC’s programs, including Financial Aid U, the Saver’s Credit Research Project, Capacity Building Grant program, Skills Based Volunteerism, Schedule C pilot and more
• NCTC changed the structure of its leadership and working groups
• NCTC helds its 8^th National Conference, which included 50+ workshops, several high-profile keynote speakers and a fireworks cruise in downtown Chicago
• NCTC Online University was launched to the entire field, providing a free platform to train your volunteers at their own pace, in their own home
• Two issue briefs were released in 2011, one on the importance and value of VITA and the other on a single higher education credit.
• Much more!

I hope you are as proud as I am of all we’ve accomplished in the past year. Millions of low-income families depend on you each year, and each year you improve the services you provide. We’re proud to call you our members!

Read the full State of the Field Report at the NCTC website. Congratulations on a great 2011 and we look forward to our continued success in 2012.

By Dan Fair, Manager of Communications & Member Relations

Senator Olympia Snowe visits a York County CA$H tax site in Maine. Members are inviting their members of Congress to visit their sites across the country.

NCTC began this year’s tax season by raising awareness of the Earned Income Tax Credit in conjunction with our field members and other national advocacy organizations. On January 26, NCTC hosted a congressional briefing to laud the many ways the Earned Income Tax Credit (EITC) helps families, communities and local economies. During January and February, NCTC members around the country are hosting policy makers at their local tax sites to bring attention to the EITC and to their free tax payer services.

At NCTC’s Congressional briefing, there was standing room only! Jackie Lynn Coleman, Executive Director of NCTC, urged the group, “In these particularly difficult economic times, it’s crucial that all families who are eligible for the EITC actually claim it.”

The event was cosponsored by:

NCTC also announced the release of its latest paper, titled “The EITC: Good for Our Families, Communities and Economy,” which outlines the direct and indirect benefits of the tax credit. Since its inception, the EITC has helped millions of low- and moderate-income families avoid poverty and begin their path toward financial security.

NCTC Executive Director Jackie Lynn Coleman speaks on the importance and success of the EITC

Teffany Horne, an EITC recipient, was on hand to talk about how positive her experience has been working with the Baltimore CASH campaign to claim her tax refund. VITA sites, like Baltimore CASH campaign, are the vital link that allows individuals to file their taxes for free and claim tax credits.

Horne spoke about how valuable the EITC has been for her to meet the needs of her family, and how it enabled her to start saving. You can hear more from Teffany here.

In 2012, NCTC will continue advocating for retaining the critical improvements to the EITC that were part of the American Recovery and Reinvestment Act of 2009. Additionally, NCTC will advocate to increase the EITC for single taxpayers with no children, and to preserve and improve existing tax credits.

By Gail Parson, Manager of Civic Engagement

Yesterday, NCTC released "The EITC: Good for our Families, Communities and Economy."

This is the final installment of our week-long series on the Earned Income Tax Credit to celebrate EITC Awareness Day today. We hope you enjoyed it!

The many strengths of the EITC – and relevant policy priorities for 2012

The Earned Income Tax Credit is probably best known for boosting working families’ earnings and lifting about 6 million households from poverty every year.  But as a new paper from the National Community Tax Coalition notes, extensive studies demonstrate that the credit’s values also extend to strengthening:

• Children’s education outcomes – an EITC increase of even $1,000 in family incomes can help raise math and reading test scores by a statistically significant amount.

• Families’ health outcomes – states with their own EITCs see higher baby birthweights and lower incidences of maternal smoking.

• Local economic vitality – a number of “multiplier effect” studies have concluded the EITC bolsters neighborhood businesses in ways that help whole communities to thrive.

“The EITC:  Good for Our Families, Community & Economy”  highlights some of the research behind these and other significant facets of the credit – research that, in many cases, has appeared in Tax Credits for Working Families over the last couple of years.

All these findings are important to keep in mind as EITC Awareness Day approaches on Jan. 27, as tax-filing season kicks off – and as Congress prepares for another year of policymaking.

Appropriately, the NCTC paper lays-out several policy priorities for 2012, including the needs to:

• Maintain important improvements in the EITC for married couples and for families with three or more children.  Without Congressional action, these improvements will end with the Dec. 31 expiration of American Recovery and Reinvestment Act extensions.
• Defend state EITCs from cuts, strengthen them and create new ones in states that lack them.  These critical state credits piggyback on and add to the value of the federal EITC.
• Sustain and boost Volunteer Income Tax Assistance (VITA) services, which help low-income, working families connect with the EITC help they need but might otherwise miss.  Legislation known as the VITA Act – S.816 and H.R.2151 – would bolster resources for these critical services over five years, as well as strengthen quality-assurance efforts.

Without attention to such policy detail, the credit’s many research-proven, societal benefits are at risk of erosion.  And that erosion starts with the effects felt by individual families, such as those from two Wilson, North Carolina households who described the EITC’s significance in the new NCTC paper.

“It means a new pair of shoes or much-needed medicines,” said a mom from one family. “Buy groceries, put clothes on our backs, fill our gas tank up in our car, pay rent and other bills, pay medical bills and help with home repairs,” added another.

Judging by its effects on individual families and its impacts on entire communities, there’s obviously a lot riding on the EITC.  So let’s keep it strong for those who need it, today and tomorrow.

By Sean Noble, Director of Public Policy & Research

The Center for American Progress estimates the EITC kept 6 million people out of poverty in 2010, including 3 million children

This post is part of our week-long series on the Earned Income Tax Credit to celebrate EITC Awareness Day on Friday, January 27. Check back each day for a new post!

By any measure, poverty rates have climbed over the last decade, highlighting the increasing number of individuals that are joining the millions of Americans already living without the proper resources to support their families. What these same measures have often hidden are the effects of our most valuable public assistance and anti-poverty programs on keeping families from falling into poverty altogether.

In a recent report from the Center on Budget and Policy Priorities analyzing the effects of anti-poverty programs under an alternative poverty measure adopting recommendations from the National Academy of Sciences, the combined effects of six enhancements to federal anti-poverty programs found in the 2009 Recovery Act worked to keep 6.9 million people above the poverty line. Additionally, this report attributes the specific enhancements to the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) in the Recovery Act for keeping 1.6 million of these individuals out of poverty. With these measures set to expire at the end of 2012, there is a looming possibility that millions of Americans may once again be pushed below the line no matter where it is drawn.

Of course, observing the number of individuals moved above or below the federal poverty line is by no means the only measure showing the effectiveness of the EITC at keeping families out of poverty. Using the Supplemental Poverty Measure developed by the U.S. Census Bureau, the overall poverty rate ticks up slightly higher to 16 percent. However, and more significantly, the Census Bureau’s analysis reveals that the assistance specifically provided by the EITC reduced the overall rate by two percentage points, accounting for millions of individuals. Again, this demonstrates the real relief that a single, well-crafted and targeted tax credit like the EITC can have at keeping families and children from becoming another statistic of poverty.

Measurement and analysis alone will not lay the path we need to achieve real poverty relief. As National EITC Awareness Day approaches this week, we need to recognize that these indicators represent real families that benefit from our nation’s largest anti-poverty program, the EITC. Let’s remember to use this week to build awareness of not only the working families who have been kept above the line by the EITC but of the policy changes we must make to help those we have yet to lift up.

By Holden Weisman, Policy Analyst

Client stories are one of the most effective advocacy tools.

This post is part of our week-long series on the Earned Income Tax Credit to celebrate EITC Awareness Day on Friday, January 27. Check back each day for a new post!

This year for EITC Awareness Day, be sure to talk to taxpayers themselves about just how valuable this credit is to working families.

Thanks to the Earned Income Tax Credit, one family will be able to afford quality childcare for the children, one family will be able to make some medical bill payments, one household will be able to make extra mortgage payments, one father can now make some much-needed car repairs, one mother can buy gas and extra groceries, students can pay down their student loan debt and maybe they can all put a little bit away to save for the future.

These stories from VITA clients help make the connection between a complicated tax code and its real-world effects in communities everywhere. Highlighting how each family plans to use their EITC refund provides a local perspective on national issues – a perspective that our friends in Washington, D.C. should not overlook. Of course, numbers and statistical data about the economic impact of the EITC are important, but the EITC was created to help families get ahead and to stay out of poverty, so the stories they can share about the EITC’s worth get right at the heart of the matter as to why this tax credit exists and why it should remain strong.

For EITC Awareness Day, please take the time to ask clients just what the EITC means to them – whether it means school supplies or utility bills, less debt or savings. Our website has some tips and resources on collecting stories, as well as valuable information about the EITC and other refundable tax credits. Together we can raise awareness of this vital tax credit so that everyone who qualifies is sure to claim it, and with these stories, we will work towards ensuring that the EITC continues to be the boost that hardworking families really need.

By Jennifer Thall, Coordinator of Civic Engagement