The Earned Income Tax Credit and the Volunteer Income Tax Assistance Program HOW ELECTED OFFICIALS CAN GET INVOLVED IN OUTREACH

The Earned Income

Tax Credit and the

Volunteer Income Tax

Assistance Program

HOW ELECTED OFFICIALS CAN

GET INVOLVED IN OUTREACH

THE EARNED INCOME TAX CREDIT AND THE

VOLUNTEER INCOME TAX ASSISTANCE

PROGRAM: HOW ELECTED OFFICIALS CAN GET

INVOLVED IN OUTREACH

INTRODUCTION. . . 3

CHAPTER 1: EITC BACKGROUND AND DOCUMENTS . . . 5

About the Federal EITC . . . 6

About State EITCs . . . 10

About the Volunteer Income Tax Assistance Program . . . 13

EITC Q&A . . . 18

CHAPTER 2: IDEAS FOR ELECTED OFFICIALS . . . 21

Ideas for Elected Officials. . . 22

Sample Newsletter Article and Website Ideas. . . 24

Template Op-Ed . . . 26

Template Media Advisory for Elected Official’s Site Visit. . . 28

Template Press Release for Elected Official’s Site Visit . . . 29

Talking Points . . . 30

CHAPTER 3: HOW OTHERS ARE GETTING INVOLVED IN EITC OUTREACH . . . 33

How Elected Officials are Getting Involved . . . 34

Media Coverage. . . 62

CHAPTER 4: EITC STATISTICS . . . 89

EITC Receipt by State. . . 90

EITC Receipt by Congressional District . . . 92

Community Volunteer Income Tax Assistance Results by State . . . 112

CHAPTER 5: EITC RESOURCES AND CONTACTS . . . 115

ACKNOWLEDGMENTS. . . 119

To find a VITA site near you, call 1-800-829-1040 or visit the National Community Tax Coalition’s website

at http://www.tax-coalition.org/programs.cfm

Dear Elected Official,

Thank you for taking the time to explore how you can work with your constituents to help

them build economic security for their families and in their community. The federal Earned

Income Tax Credit (EITC), which is also available as a state tax credit in 24 states, helps low

and middle income working families keep more of the money they earn so they can afford needed

food and other necessities. Unfortunately, many eligible families aren’t aware of the EITC and

aren’t receiving the credit. As an elected official, you can help raise awareness of the program

and connect with your constituents – a win-win situation.

The National Community Tax Coalition (NCTC), a nationwide network of community tax

preparation programs and The Hatcher Group, a public affairs and communications firm that

connects nonprofits and foundations to policymakers and the media, have come together with

the generous support of the Kellogg Foundation to raise awareness of the EITC, the importance

of Volunteer Income Tax Assistance (VITA) sites, and the need to build support for EITC

benefit expansions and program funding increases.

One of the most effective ways to achieve these goals is for local, state, and federal elected

officials to help educate their constituents about the availability of the EITC, free tax assistance

sites, and to work in support of the program. You have a valuable “bully pulpit” that allows you

to reach more people in your community and educate them about building economic security. In

this troubling economy filled with news of job layoffs, rising gas and food prices, and home

foreclosures, it’s more important than ever that families in need know about the programs that

exist to help.

Many members of Congress, governors and state legislators are already conducting EITC

outreach, as you’ll see in the Examples of Outreach Chapter. We’re proud of the EITC’s long

history of bipartisan support. We encourage you to take a look at what others are doing and see

how you can get involved. While an average of 75 percent of eligible people receive the EITC,

there are many families in your state that are missing out on benefits that could help them climb

the economic ladder.

We’ve put together this toolkit, and an accompanying version specifically for EITC advocates, to

help make your job easier. Included in the guide, you’ll find new and unique EITC outreach ideas

for working with your constituents, and template materials such as press releases, newsletter

articles and opinion-editorials. We’ve also packed it full of EITC data and resource materials so

you have all the facts at your fingertips on how important the EITC is to America’s families and

why it should be supported and expanded.

Thank you for your interest in this guide and support for this valuable program. If you have any

questions or would like any assistance in conducting a site visit to a VITA site or being

connected with EITC advocates in your state, please contact:

Amy Battjer, Senior Associate, The Hatcher Group, amy@thehatchergroup.com, 301-656-0348

Laura Hayes, Senior Associate, The Hatcher Group, laura@thehatchergroup.com, 301-656-0348

Lucy Mullany, NCTC Field Organizer, lmullany@economicprogress.org, 312-252-0280 x. 270

An electronic version of this toolkit can be found at

http://www.thehatchergroup.com/EITCoutreach.html

Sincerely,

David Marzahl

Ed Hatcher

Executive Director

President

Chapter 1

EITC

BACKGROUND

AND

DOCUMENTS

N

About the Federal EITC

N

About State EITCs

N

About the Volunteer Income

Tax Assistance Program

N

EITC Q&A

ABOUT THE

FEDERAL EARNED INCOME TAX CREDIT

The Earned Income Tax Credit (EITC) is a federal tax credit for low-income working

individuals and families. It is intended to reduce the tax burden on low-income workers,

supplement their wages, and help families make ends meet. Even workers whose income is too

small to pay taxes can receive a refund though the EITC. In tax year 2006, the EITC provided

$43.7 billion in reduced or eliminated tax liability and cash refunds to more than 22 million

low-income families.

The EITC is one of the most successful federal anti-poverty programs ever developed. The

impact of the EITC on a working family’s income can be considerable. For example, in 2009, a

single parent raising two or more children and earning between $12,050 and $18,750 is eligible

for the maximum EITC of $4,824—a full 25 to 40 percent increase in the family’s income.

Taxpayers with one child can claim a maximum EITC of $2,917. Claiming the Child Tax Credit

in addition can provide up to $1,000 per child to eligible families.

More than four million people – roughly half of them children – escape poverty each year as a

result of the EITC. A study by The Brookings Institution found the EITC reduces poverty among

young children by nearly one-fourth.

The EITC significantly increases the number of single parents who join the workforce. One

study found the proportion of single mothers who worked increased dramatically between 1984

and 1996 due to legislative increases in federal EITC benefits.

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Who is eligible?

Working families with children

that have annual incomes

below approximately $34,000

to $41,000 (depending on

marital status and the number

of children in the family) are

eligible for the EITC. Also,

low-income workers without

children who have incomes

below approximately $13,000

($16,000 for a married couple)

can receive a very small EITC.

1_{Eligibility description and chart provided by Center on Budget and Policy Priorities, “Policy Basics: The Earned Income Tax Credit”} (http://www.cbpp.org/cms/index.cfm?fa=view&id=2505)

2 _{Sawhill, I. & Thomas, A. (2001). A hand up for the bottom third: Toward a new agenda for low-income working families. Washington,} DC: The Brookings Institution.

3 _{Meyer, B. D. & Rosenbaum, D. T. (2001). Welfare, the Earned Income Tax Credit, and the labor supply of single mothers. Quarterly} Journal of Economics, 116(3), pp. 1063–1114.

Interviews with EITC recipients find that they use their refunds to pay off debt, invest in

educa-tion, and secure decent housing, thus enhancing economic well-being and promoting

commu-nity revitalization in their neighborhoods.

A

MERICAN

R

ECOVERY AND

R

EINVESTMENT

A

CT

In the 2009 American Recovery and Reinvestment Act (ARRA), the Earned Income Tax Credit

was temporarily expanded for two specific groups: families with three or more children and

married couples. Effective for the 2010 and 2011 filing seasons, the EITC will support these

tax-payers by:

N Creating a new “third tier” of the EITC for families with three or more children. In this

tier, the credit would phase in at 45 percent of income (up from 40 percent under current

law), effectively increasing the maximum credit for these families by almost $600.

N Increasing marriage penalty relief by raising the income threshold at which the EITC

be-gins to phase out for married couples to $5,000 above the amount for unmarried filers (an

increase of $2,000).

These changes will benefit an estimated 7.7 million families nationwide by increasing the

amount of EITC for which they are eligible and make 900,000 families newly eligible for the

credit. The amount of EITC dollars going to American families will increase by $4 billion – an

8.8 percent increase from current law. President Obama’s budget includes a proposal to make

these temporary changes to the EITC permanent, and U.S. Senator Max Baucus recently

intro-duced legislation that would make these improvements permanent.

H

OW TO

I

MPROVE THE

E

ARNED

I

NCOME

T

AX

C

REDIT

By reducing poverty and encouraging work, the EITC is viewed as one of the most successful

policies enacted in recent history. Yet the EITC could do more to close the gap between what

families earn and what they need to make ends meet. While the American Recovery and

Rein-vestment Act made significant improvements to the federal EITC, those changes are temporary

and additional changes could be made to improve the EITC even further. A few options have

been developed by legislators, think tanks and public policy organizations, including:

Expand the credit for childless workers

The EITC is available to childless workers, but only for individuals with incomes of up to

$13,000 ($16,000 for married couples). However, these low-income workers still face a high

federal tax burden and many of these tax filers are non-custodial parents that provide child

support to their children’s custodial parent.

Further, labor force participation among lesser-skilled men is declining and an expansion to the

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EITC could provide an additional incentive to work.

_{The EITC could be expanded for these}

low-income workers by increasing the income limits for which they are eligible for the credit,

increasing the maximum credit amount, and reducing the age at which they can claim the credit

(currently an individual must be 25 to be eligible for the EITC).

Further reducing the “marriage penalty”

The American Recovery and Reinvestment Act slightly reduced the “marriage penalty” built into

the EITC. Currently, families with two earners must report both incomes – a policy which

results in lower EITC benefits for married couples. However, there remains a significant

marriage penalty even after the ARRA adjustment. Proposals include allowing the couple to

disregard half of the earnings of the lower earning spouse if that would provide a larger EITC

_or

allowing the primary worker to claim the child-based EITC and the secondary earner to claim a

smaller credit for low-earning spouses.

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5 _{Center for American Progress. 2007. “From Poverty to Prosperity: A National Strategy to Cut Poverty in Half.” Washington, D.C.} (April, 2007), http://www.american¬progress.org/issues/2007/04/pdf/poverty_report.pdf, accessed March 25, 2009; Berube, Alan, David Park, and Elizabeth Kneebone. 2008. “Metro Raise: Boosting the Earned Income Tax Credit to Help Metropolitan Workers and Families.” Washington, D.C.: Policy Program, Brookings Institution (June).

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Pre-Recovery Act Expansions Pre-Recovery Act Expansions

State EITC-Eligible Tax Units Tax Units (%)EITC-Eligible EITC Sum ($1000s) Average EITC ($)

Tax Units Benefiting From Proposal* Newly EITC-Eligible Tax Units Additional EITC Amount

($1000s) EITC Amount%Increase in

Alabama 463,636 22.8% 864,551 1,865 145,335 17,599 67,962 7.9% Alaska 59,167 18.0% 100,666 1,701 16,104 1,571 8,078 8.0% Arizona 500,123 17.4% 957,273 1,914 184,556 21,357 100,441 10.5% Arkansas 284,165 23.4% 553,302 1,947 98,128 10,736 45,243 8.2% California 2,759,162 16.8% 5,561,291 2,016 1,062,709 117,043 588,403 10.6% Colorado 347,907 15.2% 620,598 1,784 109,517 12,034 59,717 9.6% Connecticut 206,087 12.4% 367,388 1,783 53,809 7,589 26,741 7.3% Delaware 64,363 16.1% 119,963 1,864 19,220 2,918 9,718 8.1% District of Columbia 41,302 12.9% 65,547 1,587 7,450 743 3,982 6.1% Florida 1,433,629 16.6% 2,670,844 1,863 434,257 54,316 217,202 8.1% Georgia 817,040 19.6% 1,587,836 1,943 269,558 29,314 133,699 8.4% Hawaii 96,802 15.4% 175,339 1,811 29,996 4,450 15,707 9.0% Idaho 126,819 19.5% 245,035 1,932 54,954 7,757 29,558 12.1% Illinois 970,985 16.7% 1,882,262 1,939 322,413 37,312 171,884 9.1% Indiana 515,385 18.2% 938,116 1,820 159,169 18,997 83,429 8.9% Iowa 218,225 16.0% 373,798 1,713 63,007 9,873 33,649 9.0% Kansas 205,956 16.8% 379,559 1,843 70,901 9,465 37,984 10.0% Kentucky 405,672 22.0% 742,291 1,830 114,749 14,372 58,389 7.9% Louisiana 450,028 24.1% 864,241 1,920 130,131 13,293 59,572 6.9% Maine 106,538 17.2% 190,305 1,786 32,700 4,797 15,359 8.1% Maryland 332,594 12.6% 603,499 1,815 85,616 13,768 42,331 7.0% Massachusetts 381,797 12.3% 684,086 1,792 90,116 12,304 42,248 6.2% Michigan 857,590 19.0% 1,578,230 1,840 238,707 27,669 126,423 8.0% Minnesota 347,122 14.3% 596,494 1,718 102,648 16,122 55,049 9.2% Mississippi 318,757 26.2% 621,784 1,951 99,620 9,917 47,675 7.7% Missouri 519,440 19.4% 941,069 1,812 154,608 17,987 78,102 8.3% Montana 86,493 19.8% 161,183 1,864 23,807 2,777 12,473 7.7% Nebraska 133,784 16.6% 258,132 1,929 49,999 5,048 26,766 10.4% Nevada 180,663 14.9% 331,458 1,835 66,194 7,668 35,511 10.7% New Hampshire 76,515 12.4% 134,159 1,753 20,062 2,512 9,055 6.7% New Jersey 503,322 12.5% 967,244 1,922 145,758 19,163 73,032 7.6% New Mexico 211,900 24.1% 391,777 1,849 62,627 5,482 32,221 8.2% New York 1,388,714 15.6% 2,653,481 1,911 424,293 49,447 216,425 8.2% North Carolina 796,537 19.6% 1,485,543 1,865 250,511 31,901 123,655 8.3% North Dakota 46,190 15.8% 76,827 1,663 13,069 1,245 6,115 8.0% Ohio 962,715 18.4% 1,781,718 1,851 264,930 34,424 134,023 7.5% Oklahoma 347,572 21.7% 677,211 1,948 129,410 15,073 66,298 9.8% Oregon 298,261 16.9% 511,155 1,714 93,662 12,607 48,504 9.5% Pennsylvania 951,997 16.5% 1,726,267 1,813 270,381 35,596 139,967 8.1% Rhode Island 69,592 14.0% 133,070 1,912 20,567 1,887 10,253 7.7% South Carolina 403,048 20.6% 748,879 1,858 111,784 15,840 55,478 7.4% South Dakota 67,902 18.7% 113,473 1,671 19,791 2,548 9,002 7.9% Tennessee 587,439 21.2% 1,075,600 1,831 174,891 21,035 84,511 7.9% Texas 2,167,278 21.5% 4,480,302 2,067 858,983 80,446 463,129 10.3% Utah 190,419 17.7% 386,608 2,030 88,628 14,242 48,981 12.7% Vermont 53,965 17.7% 96,208 1,783 12,464 1,294 6,726 7.0% Virginia 519,578 14.5% 968,004 1,863 142,961 20,112 68,741 7.1% Washington 468,405 15.4% 810,532 1,730 137,400 16,687 70,258 8.7% West Virginia 173,651 21.7% 306,160 1,763 50,186 7,914 24,981 8.2% Wisconsin 422,324 16.0% 770,174 1,824 116,765 16,431 61,877 8.0% Wyoming 36,132 14.4% 60,063 1,662 9,941 1,252 5,845 9.7% U.S. Total 23,974,687 17.5% 45,390,595 1,893 7,709,042 915,934 3,992,374 8.8% Source: Brookings Institution MetroTax Model

*Units "benefit" from an expansion proposal if (A) their EITC credit amount increases; or (B) they become eligible for the EITC under the new param Note: This analysis uses the 2007 American Community Survey PUMS. "Current Law" is based on tax year 2007 eligibility criteria.

"House Expansion Proposal" includes a third tier for families with three or more qualifying children that follows the income guidelines for families with two children, but phases in at 45%; it also includes a marriage penalty relief provision that phases out $2,000 after TY2007 levels for married couples.

Post-Recovery Act Expansions Pre-Recovery Act Expansions

ABOUT STATE EARNED INCOME TAX CREDITS

Twenty-four states (counting the District of Columbia) have created a state version of the

Earned Income Tax Credit (EITC) to reduce the tax burden on low- and moderate-income

working families. The state EITC supplements the federal credit and works as a rebate for state

taxes paid by low-income working people. In addition, local governments in Montgomery

County, Md., San Francisco and New York City offer their own version of EITCs.

Almost all state EITCs are

“refundable,” meaning that if

the size of the family’s credit

exceeds the amount of state

income tax it owes, the

fam-ily receives the difference in

the form of a refund check.

States with EITCs use the

same eligibility rules as the

federal EITC, meaning only

people who work can qualify

for the credit. To simplify

the process for states, most

states typically use a fixed

percentage of the federal

credit to calculate the state

credit. State credits range from 3.5 percent of the federal credit to 40 percent of the federal

credit.

The first state EITCs were enacted in the 1980s and a few states picked up the policy in the

1990s. But in recent years, state EITCs have become increasingly popular with eight states

enacting a state-level EITC and 11 states expanding existing credits since 2002. A number of

fac-tors contribute to the increased interest in adopting state EITC:

N

CONTINUED CHILD POVERTY AND ECONOMIC HARDSHIP

Millions of children in working families live in poverty, and millions of families with

incomes modestly above the poverty line have difficulty affording food, housing and other

necessities. The federal EITC now lifts about 4.4 million peopleo — over half of them

children — out of poverty each year, making it the nation’s most effective antipoverty

program for working families. State EITCs supplement the federal credit, lifting more

fam-ilies out of poverty and helping near-poor famfam-ilies make ends meet.

N

S

LOW WAGE GROWTH

Wage and salary growth has been weak in recent years. Concern about low wages has led

a number of states and the federal government to raise their minimum wages, but even

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with those increases, many low-wage jobs don’t provide a sufficient income on which to

live. Refundable state EITCs provide low-income workers with a needed income boost.

N

REGRESSIVE TAX SYSTEMS

States rely heavily on “regressive” taxes such as sales, excise and property taxes, which hit

poorer families harder than wealthier ones when measured as a share of a family’s income.

Since a state EITC is aimed only at low- and moderate-income families, it helps offset the

impact of regressive taxes, making state tax systems more fair.

N

E

XTENSIVE EVIDENCE THAT

EITC

S ENCOURAGE WORK

Studies have shown that EITCs encourage families to obtain jobs and remain employed.

N

EVIDENCE THAT

EITCS ARE USED FOR ASSET-BUILDING EXPENDITURES

Many people use their EITC refunds to make the kinds of investments that enhance

eco-nomic security and promote ecoeco-nomic opportunity, such as paying off debt and investing

in education.

N

E

ASE OF ADMINISTRATION

A state EITC requires adding just one line to a state income tax form and the calculation is

very simple. States with EITCs report very low additional administrative costs with the

credit – typically a fraction of one percent.

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TABLE 1: STATE EARNED INCOME TAX CREDITS BASED ON THE FEDERAL EITC

State*

(Tax Year 2008 Except as Noted)

Percentage of Federal Credit

Refundable?

Workers Without

Qualifying

Children Eligible?

Delaware

20%

No

Yes

District of Columbia

40%

Yes

Yes

Indiana

6% (to 9% in 2009)

Yes

Yes

Illinois

5%

Yes

Yes

Iowa

7%

Yes

Yes

Kansas

17%

Yes

Yes

Louisiana

3.5%

Yes

Yes

Maine

5% (partially refundable in 2010)

Partially

_Yes

Maryland

_25%

_Yes

_Yes

Massachusetts

15%

Yes

Yes

Michigan

10% (to 20% in 2009)

Yes

Yes

Minnesota

_{Average 33%}

_Yes

_Yes

Nebraska

10%

Yes

Yes

New Jersey

22.5% (to 25% in 2009)

Yes

Yes

New Mexico

10%

Yes

Yes

New York

_30%

_Yes

_Yes

North Carolina

_{3.5% (to 5% in 2009)}

_Yes

_Yes

Oklahoma

5%

Yes

Yes

Oregon

_6%

_Yes

_Yes

Rhode Island

25%

Partially

_Yes

Vermont

32%

Yes

Yes

Virginia

20%

No

Yes

Washington

5% in 2009 (to 10% in 2010)

Yes

Yes

Wisconsin

4% — one child

14% — two children

43% — three children

Yes

No

*Notes: From 1999 to 2001, Colorado offered a 10 percent refundable EITC financed from required rebates under the state’s “Tax-payer Bill of Rights” amendment. Those rebates, and hence the EITC, were suspended beginning in 2002 due to lack of funds and again in 2005 as a result of a voter-approved five-year suspension of TABOR. Under current law, the rebates will resume in 2011, but a recent income tax cut that also depends on the rebates is likely to exhaust the funds, leaving the EITC unfunded.

a_{Maine's EITC was made partially refundable during the 2009 legislative session. For tax years 2010 and beyond the EITC will be} refundable up to $150 for taxpayers filing married joint returns and $125 for all other taxpayers.

b_{Maryland also offers a non-refundable EITC set at 50 percent of the federal credit. Taxpayers in effect may claim either the} refund-able credit or the non-refundrefund-able credit, but not both.

c_{Minnesota’s credit for families with children, unlike the other credits shown in this table, is not expressly structured as a percentage} of the federal credit. Depending on income level, the credit for families with children may range from 25 percent to 45 percent of the federal credit; taxpayers without children may receive a 25 percent credit.

d_{Should the federal government reduce New York’s share of the TANF block grant, the New York credit would be reduced} automati-cally to the 1999 level of 20 percent.

e_{North Carolina's EITC is scheduled to expire in 2013.} f_{Oregon's EITC is scheduled to expire at the end of 2013.}

g_{Rhode Island made a very small portion of its EITC refundable effective in Tax Year 2003. In 2006, the refundable portion was} in-creased from 10 percent to 15 percent of the nonrefundable credit (i.e., 3.75 percent of the federal EITC)

h_{Washington’s EITC is worth five percent of the federal EITC or $25, whichever is greater. When the matching rate rises to ten} per-cent in 2010, the minimum value will rise to $50.

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ABOUT THE VOLUNTEER INCOME TAX

ASSISTANCE PROGRAM

BUILDING

FINANCIAL

SECURITY FOR

LOW-INCOME

FAMILIES

Community Volunteer Income Tax Assistance (VITA) programs offer free tax help and related

financial services to low-income individuals and families. During the 2009 filing season, VITA

programs directly served more than

one million underserved taxpayers, including low-wage

workers, persons with disabilities, the elderly, Native Americans, rural populations, and those

with limited English-language skills. VITA clients often have the opportunity to open bank

ac-counts and to invest their refunds in safe financial products such as U.S. Savings Bonds, while

avoiding the high fees charged by paid preparers and refund anticipation loans (RALs).

Due to high unemployment rates, reduced wages and scaled-back hours, many additional

work-ers will qualify for VITA services over the next two years. For families living on tight budgets, it

is now more important than ever to have access to free tax services and the opportunity to take

advantage of the new tax benefits enacted as part of the American Recovery and Reinvestment

Act.

_{At a time when VITA programs are poised to ramp-up services, sources of local funding}

have started to dry up. State and local governments are cutting back, while private foundations

are beginning to limit grant-making.

Funding from state and local governments, private foundations and individual donors in

combi-nation with in-kind contributions from volunteers and community organizations enabled VITA

programs to dramatically increase the number of returns prepared over the past five years. Many

VITA programs are firmly established in their communities, but struggle to balance the need to

meet growing demand with the desire to reach underserved populations where there are no

VITA sites or other alternatives to paid preparers. The 2008 Consolidated Appropriations Act

created an $8 million competitive matching grant program to enable grant recipients to assist

underserved populations living and working in hard-to-reach rural, Native, urban and suburban

communities.

Congress can help VITA programs meet the tax and financial service needs of underserved

communities by continuing to increase the appropriation for the VITA Grant Program.

Ad-ditional funding, beyond the original $8 million appropriation, would make it possible for VITA

programs to effectively serve and reach more working families hit hard by the recession.

THE

IMPACT OF

COMMUNITY

VITA

Community VITA programs are well worth the additional investment. For underserved

work-ers, the program offers free tax preparation and serves as a gateway to mainstream financial

serv-ices. To the volunteers who dedicate tens of thousands of hours during tax season, VITA

8_{Pub. L. 111-5, Sep. 30, 2009.}

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programs are an opportunity to give back to their communities. For the federal government,

VITA programs are a way to improve taxpayer services and to ensure that workers receive the

tax benefits they have earned. A substantial increase in federal funding for the VITA Grant

Pro-gram will enable community VITA proPro-grams to strengthen and expand their role as:

N

One Piece of the Economic Recovery Puzzle:

VITA programs help low-income workers

to access tax benefits, such as the Earned Income Tax Credit and Child Tax Credit.

N

A Smart Alternative to Paid Preparers:

VITA program clients keep 100 percent of their

tax refunds and avoid high-cost loan products.

N

A Bridge to Financial Security:

Many VITA programs offer clients the opportunity to

open bank accounts, invest in U.S. Savings Bonds and access public benefits.

THE

VITA GRANT

PROGRAM

While VITA programs have been in existence for 40 years, which is as long as the federally

funded Tax Counseling for the Elderly (TCE) and Low-Income Taxpayer Clinic (LITC)

programs combined, the program did not receive federal funding until the 2008 Consolidated

Appropriations Act

_{authorized an $8 million competitive matching grant program.}

The 2009 Omnibus Appropriations Act

_{extended funding by $8 million through September 30,}

2010. And the President’s FY 2010 budget proposes to continue funding by an additional $8

mil-lion through September 30, 2011.

Congress created the matching grant program to help VITA programs achieve the

follow-ing objectives:

N Enable the VITA programs to extend services to underserved populations in

hardest-to-reach areas, both urban and non-urban

N Increase the capacity to file returns electronically

N Heighten quality control

N Enhance training of volunteers

N Significantly improve the accuracy rate of returns prepared at VITA sites.

F

IRST

-Y

EAR

R

ESULTS

From July to September 2008, 379 VITA programs applied for $30 million in funding with 111

first-year applicants receiving a grant. Grant amounts ranged from $731 to $600,000 with a

median grant of $56,000. Of the $8 million available in FY 2008, the IRS allocated $7.4 million

10 _{Pub. L. 110-161, Dec. 26, 2007 (121 Stat. 1975).} 11 _{Pub. L. 111-8, Mar. 11, 2009 (123 Stat. 634).}

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for grants and retained the remaining $600,000 to cover a portion of the $2.1 million it cost to

administer the program in its first year.

Diverse organizations received funding, including community-based organizations, local United

Ways, asset-building coalitions, national nonprofits, AARP, community action agencies, local

and tribal governments and public universities. Programs serving rural populations received

one-fourth of the grant funding, while organizations serving Native American communities and

disabled persons received 5 and 3 percent of the funding, respectively.

During the 2009 filing season, the IRS conducted its first rigorous evaluation of VITA tax

prepa-ration accuracy.

_{The study, which will serve as a baseline for future evaluations, is expected to}

be released in late 2009.

VITA programs file more than 90 percent of tax returns electronically. During filing season

2009, approximately half of all VITA clients requested direct deposit with nearly 3,000 choosing

the split refund option (a substantial increase from the 2008 filing season) that enables

taxpay-ers to direct refunds toward multiple accounts. VITA programs view direct deposit and split

refunds as a way to promote asset-building at tax sites. For example, in 2009, numerous

programs allowed clients to direct a portion of their refund toward the purchase of U.S. Savings

Bonds.

THE

COST OF

PAID

TAX

PREPARATION AND

REFUND

ANTICIPATION

LOANS

Low-income workers and their families have benefited from the creation and expansion of

refundable tax credits, such as the EITC and the Child Tax Credit. However, these and other tax

credits continue to increase tax code complexity, making it nearly impossible for low-income

workers to complete their tax returns unassisted. The majority of Americans need help

prepar-ing their tax returns. In 2007, paid tax preparers completed nearly 87 million tax returns – 63

percent of all returns filed. The percent of low-income taxpayers relying on paid tax preparers is

even higher: for example, nearly three-fourths of the 23 million EITC recipients rely on a paid

preparer.

H&R Block, one of the more competitively-priced tax preparers, charged an average of $187 per

return in 2009. Meanwhile, consumer advocates estimate that in 2007, 5.4 million EITC

recipi-ents took out a refund anticipation loan (RAL) at an average cost of $96 per loan. As VITA

programs plan how to help clients take advantage of next filing season’s expanded tax benefits,

many paid preparers will be looking for ways to profit from expected large tax refunds.

In 2008, the average VITA client earned $18,800 before taxes or about $9 per hour. At this hourly

rate, a person must work 21 hours just to cover the average cost of tax preparation at H&R

Block. This same person needs to work nearly 6.5 additional hours to purchase an H&R Block

refund anticipation loan.

12 _{During a May 20, 2009 meeting at the Center for Economic Progress’s office in Chicago, IL, the Internal Revenue Service’s} Stakeholders, Partnerships, Education, and Communication office provided information on the fiscal year 2008 administrative ex-penses and indicated that the IRS would increase the allocation of grant funds toward administrative exex-penses in fiscal year 2009. 13 _{The Treasury Inspector General for Tax Administration (TIGTA) conducts an evaluation each year. Although the study includes a} statistically valid sample of tax sites and tax returns, it islimited to a small number of tax sites. Further, the 2008 audit examined only 36 returns between VITA and the Tax Counseling for the Elderly programs.

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REFUND

ANTICIPATION

LOANS

Refund Anticipation Loans (RALs) are one- to two-week loans secured by a taxpayer’s expected

tax refund. For a steep price, RALs provide taxpayers near-instant access to their tax refunds.

Unfortunately, many taxpayers do not understand the true cost of RALs or know that by

choos-ing direct deposit they can receive their tax refund in as little as 10 days. Paid tax preparation

and RALs are an enormous drain on federal programs like the EITC and Child Tax Credit. Every

dollar spent on high-cost services and products is one less dollar hard-working taxpayers have

available to spend or save.

N 8.7 million taxpayers purchased a RAL during the 2007 filing season

N Taxpayers paid an estimated $833 million in RAL fees

N The cost of a $3,000 RAL ranges from $62 to $110

N 63 percent of RAL customers receive the EITC

N RAL fees drain $523 million from the EITC program

C

OST OF

P

AID

T

AX

P

REPARATION AND

RAL

S TO THE

EITC P

ROGRAM

Source: Fox, Jean Ann and Chi Chi Wu, Big Business, Big Bucks: Quickie Tax Loans Generate Profits for Banks and Tax Preparers While Putting Low-Income Taxpayers At Risk, National Consumer Law Center and Consumer Federation of America, Washington, DC: Feb. 2009 http://www.consumerlaw.org/issues/refund_anticipation/content/2009_RAL_Report.pdf.

COMMUNITY

VITA

AND

ASSET-BUILDING

SERVICES

Tax preparation remains the cornerstone of VITA programs. But in recent years, more VITA

pro-grams have offered financial services and products to help clients save and invest their tax

refunds.

Total federal tax refunds

returned to VITA clients reached

$1.4 billion

in 2009,

mak-ing tax season the time for workers to take account of their family’s finances and invest in their

children’s futures.

A recent survey of National Community Tax Coalition member organizations found that two

out of three programs offer clients the opportunity to open checking and saving accounts at tax

Type of fee

Cost to taxpayer

Drain on EITC Program

Tax preparation fee

$183

$996 million

RAL loan fee (including dummy account fee)

$58 or $107.50

$523 million

Add-on RAL Fee (for 20%)

$40

$44 million

Total Cost

$281 or $330.50

$1.56 billion

14 _{Fox, Jean Ann and Chi Chi Wu, Big Business, Big Bucks: Quickie Tax Loans Generate Profits for Banks and Tax Preparers While} Putting Low-Income Taxpayers At Risk, National Consumer Law Center and Consumer Federation of America, Washington, DC: Feb. 2009, http://www.consumerlaw.org/issues/refund_anticipation/content/2009_RAL_Report.pdf.

15 _{Fox, Jean Ann and Chi Chi Wu, Big Business, Big Bucks: Quickie Tax Loans Generate Profits for Banks and Tax Preparers While} Putting Low-Income Taxpayers At Risk, National Consumer Law Center and Consumer Federation of America, Washington, DC: Feb. 2009, http://www.consumerlaw.org/issues/refund_anticipation/content/2009_RAL_Report.pdf.

time. In addition, one-quarter of programs offer clients the opportunity to invest a portion of

their refund in U.S. Savings Bonds or Certificates of Deposit (CDs). Each tax season, VITA

programs offer new, innovative financial products to connect their clients to the financial

mainstream. For example, during the 2009 filing season, several programs piloted low-fee

prepaid debit cards that allow unbanked clients to take advantage of direct deposit, electronic

bill pay, and ATM access. VITA programs not only open doors to working-family tax credits,

but also act as a gateway to financial opportunity.

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EITC Q & A

BASIC

FACTS

ABOUT THE

EITC:

Q. What is the Earned Income Tax Credit?

A. The Earned Income Tax Credit (EITC) is a federal tax credit for low-income working

individ-uals and families. It is intended to reduce the tax burden on low-income workers, supplement

their wages and help families make ends meet. Even workers whose income is too small to

pay taxes can receive a refund though the EITC. In tax year 2006, the EITC provided $43.7

billion in reduced or eliminated tax liability and cash refunds to 22.4 million low-income

families.

Q. What does it mean to be a refundable tax credit?

A. This means that the family gets a refund check even when the credit is greater than the

amount they owe in taxes. Due to the refundable nature of the EITC, it has become the

largest federal income support program for low-income working families.

Q. Who qualifies for the EITC?

A. Working families with children that have annual incomes below approximately $35,000 to

$48,000 (depending on marital status and the number of children in the family) generally are

eligible for the EITC. Also, poor workers without children who have incomes below

approxi-mately $13,000 ($16,000 for a married couple) can receive a very small EITC.

Q. How do people claim the EITC?

A. To claim the EITC, you must file a tax return. Families making below $42,000 can get their

taxes done for free at a Volunteer Income Tax Assistance (VITA) site. These trained

volun-teers can help families complete their taxes and ensure they claim valuable credits including

the EITC and the Child Tax Credit. You can find a VITA site by calling the IRS toll-free

num-ber at 1-800-906-9887 or visiting the National Community Tax Coalition website at

www.tax-coalition.org.

MISCONCEPTIONS ABOUT THE

EITC:

Q. Isn’t the EITC just welfare?

A. No, the EITC is not welfare. You must work to claim the EITC. The refundable nature of the

EITC is what makes it such a powerful tool to help hard-working families keep more of their

hard-earned dollars. Each year EITC refunds lift more than 4.4 million people – roughly half

of them children – out of poverty. The families who would receive a refund do pay taxes.

Low-income families pay sales tax, property tax, excise tax and other taxes. A refundable

EITC helps offset these other taxes, thereby making the tax system more fair. Extensive

re-search has shown that the EITC increases workforce participation among low-income

fami-lies, but refundability is key to this effect.

Q. What about the fraud and overpayment rates? I’ve heard that many people who claim the

EITC don’t qualify.

A. The rates you may have heard about are based on studies completed by the IRS in 1999 and

2001. These studies are seriously compromised by major methodological problems that likely

caused the estimate to overstate the actual error rate.

Overpayment is not the same as "fraud." To the extent these studies found actual

overpay-ment, it was largely the result of families with few resources attempting to understand and

comply with fairly complicated rules — not intentional abuse of the tax system.

Since then, Congress and the IRS have worked toward simplifying the rules and increasing

oversight in order to reduce confusion and reduce potential rates of fraud and overpayment.

Among the changes:

N Congress passed a new Uniform Definition of Qualifying Child, which simplified the

definition and helped clear up confusion that had previously been a significant source

of errors.

N The IRS developed a powerful database to help identify cases in which an EITC

claimant may be wrongly claiming a child.

N Since 2001, the IRS has improved its methods for identifying EITC filers who appear to

be under-reporting their income.

N The IRS has launched an initiative to identify commercial tax prepares who have

sub-mitted a significant volume of erroneous EITC claims and to target the preparers for

more intensive enforcement and education activities.

N The IRS holds extensive oversight with the VITA program to ensure quality

prepara-tion. The IRS requires volunteers to be IRS-certified by passing a competency exam.

Additionally, the VITA sites have no profit motive to inflate refunds.

By comparison, noncompliance in other parts of the tax system results in a much higher loss

of income for the IRS than any EITC overpayments. The 2001 IRS “tax gap” study, which

as-sessed noncompliance throughout the tax code, found that 51 percent of rent and royalty

in-come, 57 percent of small business income and 72 percent of farm income went unreported.

This misreporting of business income is at least 10 to 12 times the size of total EITC

overpay-ments.

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Chapter 2

IDEAS FOR

ELECTED

OFFICIALS:

GETTING INVOLVED IN FREE

TAX ASSISTANCE AND EITC

OUTREACH

P

Ideas for Elected Officials

P

Sample Newsletter Article and Website Ideas

P

Template Op-Ed

P

Template Media Advisory

P

Template Press Release

P

Talking Points

IDEAS FOR ELECTED OFFICIALS:

GETTING INVOLVED IN FREE TAX ASSISTANCE

AND EITC OUTREACH

Every year during tax season, Volunteer Income Tax Assistance (VITA) sites across the country

help low- and moderate-income people file their taxes. At these VITA sites, individuals and

families receive much needed tax assistance at no cost, while also learning about the tax credits

they may be eligible for that will help them make ends meet.

One of the most important tax credits for low- and middle-income working families is the

Earned Income Tax Credit (EITC). The EITC rewards work and helps put more money back in

the pockets of hard-working Americans and stimulates local economies.

The EITC consistently receives bipartisan support, having been created under President Ford

and expanded under Presidents Reagan, Bush Sr., and Clinton. The program also received

support by President Bush, and President Obama has already expanded the program to

temporarily increase EITC benefits. It is an issue that everyone can stand behind and promote as

an economic resource for their state.

HOW TO

GET

INVOLVED

VITA sites and the EITC are remarkable programs, but too often families don’t know about the

programs and miss out on the benefits. An elected official can help increase awareness and build

connections with their constituents through EITC outreach. Following are a list of easy ways to

get involved and help families in your community.

1. C

ONDUCT A

S

ITE

V

ISIT

:

The Volunteer Income Tax Assistance program, which is funded in

part by the IRS, is available nationwide and offers free tax help to low- to moderate-income

(approximately $42,000 and below) people. VITA sites are usually located at community

centers, libraries, schools, malls or other convenient locations. Most locations also offer free

elec-tronic filing. Tax services are also available for seniors and military.

A great way to draw attention to VITA sites is by conducting a site visit and inviting the media.

Most sites open in January and opening day events often include press conferences and

community activities to raise the site’s profile. Sites would gladly welcome an elected official at

their press conference, touring the site, and meeting families on opening day. Alternatively, visits

can be arranged anytime throughout tax season. Most tax sites are happy to help arrange press

activities around these visits as well.

To locate the nearest VITA site in your district or state, call 1-800-829-1040.

Template Site Visit Materials are included in this toolkit

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2. C

ELEBRATE

EITC A

WARENESS

D

AY

:

The Internal Revenue Service has declared the last

week day in January as federal EITC Awareness Day. Many state officials have started state

EITC Awareness Days, issuing proclamations, sending out press releases or holding events.

Governors have traditionally issued the state proclamations, but state officials and members of

Congress should join with them to show their support for the programs.

The IRS has a number of resources to learn more about EITC Awareness Day. These can be

found at: http://eitc.irs.gov and http://www.irs.gov/newsroom/article/0,,id=178072,00.html

3. H

OLD A

T

OWN

H

ALL

M

EETING

:

Officials often hold town-hall type meetings throughout

the year. During tax season, officials can provide their constituents with information about the

EITC and VITA sites at these community gatherings. Hand out flyers and ask that audience

members share flyers with their co-workers and that offices display information about the EITC

in their lunchroom or staff break rooms.

4. INCLUDE

EITC

AND

FREE

TAX

ASSISTANCE

INFORMATION IN

NEWSLETTERS AND

WEBSITES:

Many elected officials include information about the EITC and free tax assistance

information in their newsletters and on their websites. This is an excellent and easy way to get

the word out to your constituents. Details on the EITC, locations of VITA sites, and contact

in-formation can be included. A website could include a link to your community’s VITA sites with

information about who is eligible for the EITC and what materials people should bring to have

their taxes filed.

A Sample EITC Newsletter is included in this toolkit

5. START A

STATE

EITC CAMPAIGN:

Twenty-four states (counting the District of Columbia)

have created a state version of the EITC to reduce the tax burden on low- and moderate- income

working families. The state EITC supplements the federal credit and works as a rebate for state

taxes paid by low-income working people. In addition, local governments in Montgomery

County, Md., San Francisco and New York City offer their own version of EITCs.

Look into creating a state EITC or increasing the benefit level if your state already has enacted a

state EITC. The site, www.stateEITC.com is an excellent resource to explore what other states

have done and how to work toward building or strengthening a state EITC in your state.

6. B

UILD RELATIONSHIPS

:

Local and state groups are responsible for running the free tax

assistance sites and would welcome the support of elected officials. In addition to local, state, or

federal elected officials visiting a tax site, a site visit is a great way for your staff members to

learn more about the local group and how their boss can get involved.

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SAMPLE NEWSLETTER ARTICLE AND

WEBSITE IDEAS

Dear Neighbor,

Did you know that there are a number of locations in our community where low- and

moderate-income people can get help filing their taxes at no cost? The Volunteer Income Tax Assistance

(VITA) program, which is funded in part by the IRS, offers free tax help to people making less

than approximately $42,000 a year.

In addition to receiving much-needed tax help, families will also learn about important tax

cred-its that they may be missing out on. The Earned Income Tax Credit (EITC) is a tax credit

espe-cially for low-income working families. It helps workers keep more of the money they earned,

which helps families pay their rent and buy groceries or new shoes for their kids.

In 2007, ## families received the EITC in our state, but there are many more who are eligible but

don’t know about the program. I’m hopeful that more (State) families will learn about the EITC,

visit a VITA site and file their taxes this year. The amount of your EITC refund depends on

things like income and family size, but many families receive rebates of a couple thousand

dol-lars – make sure you don’t miss out on your refund. If you didn’t claim the EITC in the past, you

may also be able to file amended claims and receive more of the money you’ve earned.

To find a VITA site near you, call 1-800-829-1040 or visit my website at XXXX.

Please let your friends, families and co-workers know about this important service. No one

en-joys filing their taxes, but VITA sites help make it a little easier.

W

EBSITE

I

DEAS

An elected official’s website is an excellent way to further spread the word about the EITC and

the availability of VITA sites. If you already have this important information on your website,

take a moment to make sure it’s up-to-date and if there are any additional resources you can

in-clude. Below are links that would provide your constituents with this important information.

EITC Assistant

http://www.irs.gov/individuals/article/0,,id=130102,00.html

This is the IRS’s site for determining EITC eligibility. Available in English and Spanish.

VITA Information

http://www.irs.gov/individuals/article/0,,id=107626,00.html

This is the IRS’s site on the Volunteer Income Tax Assistance program. It includes information

on the materials needed when filing taxes as well as how to find a site.

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IRS Official EITC Central Site

http://www.eitc.irs.gov

This site is geared toward IRS partners and tax preparers, but also includes links and tools for

tax payers. It’s a user-friendly site with forms, marketing and education toolkits, EITC statistics

and press materials.

State EITC Online Resource Center

http://www.stateeitc.com

This site provides elected officials, advocates and others with information about State EITC’s,

including a 50 state map with information on each state’s EITC, new reports and videos and

success stories from states that have implemented a state level EITC.

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TEMPLATE OP-ED

Tips: This op-ed could be pegged to EITC Awareness Day in January or to the opening of the

VITA sites to enhance its newsworthiness. Otherwise, the ideal time to submit this op-ed is in

February or March, when people are more likely to have received their W-2’s and more likely to

be ready to prepare their taxes. Also, feel free to insert statistics pertaining to your district and

anecdotes that demonstrate the impact of the EITC on families’ lives and the local economy.

By Elected Official

In this current economic climate, many of our [state/city/region]’s hard-working families are

doing all that they can to make ends meet, yet still falling short. As the 2010 tax season begins, I

want to make sure that all citizens who qualify for the Earned Income Tax Credit (EITC)

re-ceive the boost of help that they deserve.

The EITC is a federal tax credit that provides extra financial support to low- and

moderate-in-come working families. Refunds help families pay for necessities, like utility bills, rent and

chil-dren’s school supplies. The EITC makes a tangible impact on the lives of people in our

community.

The EITC is available to working people with low to moderate incomes, helping supplement

wages. The amount of the EITC varies, depending on families’ income and number of children.

These funds have a significant impact on helping families make ends meet. But the EITC also has

a remarkable impact on our local economy. Every year, the program brings back $[Dollars]* to

our [state/city/region]. The EITC is a win-win for reducing poverty among working families and

boosting the community as a whole.

Nationally, eligible low-income taxpayers fail to claim billions of EITC dollars every year –

bil-lions of dollars that could go back into the pocketbooks of families and back into our economy.

In [state/city/region] alone, $[Dollars] in EITC dollars annually go unclaimed.

Too often, eligible families are unaware of the EITC and the benefits they can receive. But thanks

to a growing number of free tax preparation sites – often known as Volunteer Income Tax

Assis-tance (VITA) sites — families can receive guidance and assisAssis-tance at no cost.

VITA sites, which are supported by partnerships between the Internal Revenue Service and

nonprofit organizations, offer free tax assistance by trained volunteers to low- and moderat-

in-come families and individuals, the elderly and the military. Across the nation, nearly 12,000

VITA sites offer free tax preparation services to people earning less than $42,000 per year.

In [state/city/region], we have [Number]* VITA sites providing this help right in our

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nity. [Provide information about local tax site, with phone and website information.] I hope that

all eligible families will take advantage of this free assistance.

In the 2009 tax season, VITA sites in [state/city/region] helped [Number] families complete

their tax returns and collectively receive $[Dollars] in refunds.

Now, more than ever, our families need this kind of support. It is my hope that all of the families

in [state/city/region] who qualify this year will receive the full extent of tax relief that they

de-serve.

*These statistics can be found in Chapter 4.

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TEMPLATE MEDIA ADVISORY FOR ELECTED

OFFICIAL’S SITE VISIT

MEDIA ADVISORY

CONTACT:

[Date]

[Name, Number]

In Midst of Economic Challenges, [Elected Official] Recognizes

Local Economic Boost from Earned Income Tax Credit

[Official] to Visit [Site] to Highlight Free Tax Preparation for Low-Income Families

WHAT:

[Elected Official] to visit [Site] offering free tax preparation for low- and

moderate-income families

WHEN:

[Time and Date]

WHERE:

[Location]

[City]

– As the 2010 tax season begins, [Elected Official] is calling attention to the free

income-tax filing assistance offered to low- and moderate-income families throughout [Region]. On

[Date], [Elected Official] will visit [Site Name], one of [Number] of sites in the area providing

this free service that helps ensure families complete accurate returns and receive tax credits for

which they’re eligible, including the Earned Income Tax Credit (EITC) and the Child Tax Credit.

“Nationwide, billions of dollars in Earned Income Tax Credits go unclaimed by low-income

taxpayers every year,” [Elected Official] said. “In these challenging economic times, we want to

ensure that all of the eligible hard-working, low-income families in our area are receiving the

EITC, and getting money back to help make ends meet.”

In 2009, [Site Name] prepared tax returns for [Number] families, helping them collectively

receive $[Dollars] in refunds.

The EITC is available to working people with low to moderate incomes, helping supplement

wages and encouraging work. The amount of the EITC varies, depending on families’ income

and number of children, and is typically spent on necessities such as rent or utilities.

“The EITC is one of our most valuable anti-poverty tools,” [Elected Official] said. “Not only does

it help boost families’ financial stability, but it also brings money back into our local economy.”

Across the nation, the Internal Revenue Service partners with nonprofit organizations to

operate nearly 12,000 free tax preparation sites. These Volunteer Income Tax Assistance (VITA)

sites offer free tax help by trained volunteers to people earning less than approximately $42,000

per year. Free tax assistance is also available for seniors age 60 and older, as well as military

personnel and their families.

For more information about VITA sites, please call the IRS toll-free at 1-800-906-9887.

####

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TEMPLATE PRESS RELEASE FOR ELECTED

OFFICIAL’S SITE VISIT

FOR IMMEDIATE RELEASE

CONTACT:

[Date]

[Name, Number]

[Elected Official] Highlights Benefits of Free Tax Preparation

Services for Low-Income Families

At [Site], [Official] Recognizes Local Economic Impact from Earned Income Tax Credit

[City]

– With the 2010 tax season in full swing, [Elected Official] visited [Site] today to call

attention to the free income-tax filing assistance available for low- and moderate-income

families throughout [Region]. [Site Name] is one of [Number] sites in the area providing this

free service that helps ensure families complete accurate returns and receive tax credits for

which they’re eligible, including the Earned Income Tax Credit (EITC) and the Child Tax

Credit.

“In these challenging economic times, it is important that our community’s hard-working

families get the credits and refunds they deserve,” [Elected Official] said. “The EITC is a valuable

source of support that can help families climb the economic ladder.”

Nationally, eligible low-income taxpayers fail to claim billions of EITC dollars every year. Free

tax preparation sites – known as Volunteer Income tax Assistance (VITA) sites – run in

part-nership by the Internal Revenue Service and nonprofit organizations, offer families cost-free

assistance by trained volunteers.

In 2009, [Site Name] prepared tax returns for [Number] families, helping them collectively

receive $[Dollars] in refunds.

“The EITC helps reduce poverty and increase stability for working families,” [Elected Official]

said. “It also brings much-needed money flowing back into our local economy.”

The EITC is available to working people with low to moderate incomes, helping supplement

wages and encouraging work. The amount of the EITC varies, depending on families’ income

and number of children, and it is typically spent on necessities such as rent or utilities.

Across the nation, nearly 12,000 VITA sites offer free tax preparation services to people earning

less than $42,000 per year. Free tax assistance is also available for seniors age 60 and older, as

well as military personnel and their families.

For more information about VITA sites, please call the IRS toll-free at 1-800-906-9887.

####

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TALKING POINTS

The following talking points can be used by elected officials and their offices for a variety of

out-reach efforts around the EITC and free tax assistance.

SPREADING THE WORD ABOUT THE AVAILABILITY OF FREE TAX

ASSISTANCE CAMPAIGNS

P The Volunteer Income Tax Assistance (VITA) program, which is funded in part by the IRS,

provides free tax help to people making less than approximately $42,000 a year.

P It’s important to increase awareness about the availability of VITA sites. When workers

don’t know about VITA sites, they often turn to paid preparers, which results in high fees

and the loss of important income that is needed to make ends meet.

P Highly knowledgeable and well-trained volunteers assist families and individuals with their

taxes at VITA sites. Even more importantly, families learn about the important tax credits

they may be eligible for, including the Earned Income Tax Credit (EITC) and the Child Tax

Credit.

P Nationwide, billions of dollars in Earned Income Tax Credits go unclaimed by low-income

taxpayers every year because they don’t know they’re eligible or don’t file a claim.

P Free tax preparation helps working families and benefits the economic health of the entire

community. Tax refunds put more money back into the local economy and helps families

climb up the economic ladder.

THE BENEFITS OF THE EARNED INCOME TAX CREDIT

P The Earned Income Tax Credit is a tax credit for low-income working individuals and

fami-lies. The goal of the program is to reduce the tax burden on low-income workers and

supple-ment their wages.

P In tax year 2006, 22.4 million low-income families and individuals across the nation received

EITC benefits totaling $43.7 billion. These are families who are working hard, many at more

than one job, but whose low wages are preventing them from getting ahead. The EITC can

make the difference in making ends meet.

P The EITC is widely credited as one of most successful anti-poverty programs ever enacted.

Each year the EITC lifts more than 4.1 million people out of poverty including more than 2

million children.

P The EITC consistently receives bipartisan support, having been created under President

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Ford and expanded under Presidents Reagan, Bush Sr., and Clinton. The program also

re-ceived support by President Bush, and President Obama has already expanded the program

to temporarily increase EITC benefits.

P Members of Congress, governors and local officials around the country have come out in

support of the program and have protected its funding throughout the years. It is an issue

that everyone can stand behind and promote as an economic resource for their state.

P In the recent economic stimulus legislation, the 2009 American Recovery and Reinvestment

Act, the federal Earned Income Tax Credit was temporarily expanded for two specific

groups: families with three or more children and married couples. These benefits are set to

expire in two years. President Obama’s proposed budget includes making these temporary

changes to the EITC permanent and U.S. Senator Max Baucus recently introduced

legisla-tion that would make these improvements permanent.

P An additional improvement to the program would be to increase the maximum EITC benefit

for childless adults. This would increase the financial incentive for finding and keeping a

job.

P The EITC benefits your economy. EITC tax refunds are most often spent on necessities, such

as utility bills, household items, school clothes or school tuition. These refund dollars go

right back into the local economy creating a win-win for families and the community —

whether rural, urban, or suburban.

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Chapter 3

HOW OTHERS

ARE GETTING

INVOLVED IN

EITC OUTREACH

EXAMPLES FROM ELECTED

OFFICIALS AND MEDIA