Cities Kick Off Tax Season with Earned Income Tax Credit Campaigns
by Laura McComas
 Cities throughout the nation launched annual outreach campaigns last month to help residents claim the Earned Income Tax Credit (EITC). These campaigns offer a prime opportunity to attract millions of federal dollars into local economies and to lift families out of poverty.
More than 100 million U.S. households receive tax refund checks every year. Primarily because of the EITC, low-income families may receive up to 20 percent of their annual income at tax time. Depending on income and eligibility, the EITC can be the largest tax credit available to working families. The IRS calls the EITC a “life-changing” tax credit and points to its proven track record of boosting the incomes of working families and providing asset-building opportunities.
Last year, nearly 24 million residents claimed a total of $50 billion in benefits from the EITC alone, with the average individual credit totaling more than $2,000. This year, due to expansions of the EITC from the American Recovery and Reinvestment Act, the credit could put up to $5,657 into the pockets of eligible taxpayers.
The EITC also helps promote the economic vitality of cities, and can play a big role in creating wealth and generating economic activity in a local community. In 2009, Denver’s EITC campaign returned more than $1.5 million in EITC refunds to the community.
Because of this high return on investment, many cities now lead or participate in local EITC outreach campaigns to raise awareness about the tax credit and local Volunteer Income Tax Assistance (VITA) sites. By providing free tax preparation assistance at VITA sites, cities help residents save money they would have spent on for-profit tax preparers as they seek to claim the EITC and other poverty-reducing tax credits.
A number of cities have gone a step further by connecting residents to a range of asset-building initiatives at VITA sites. These initiatives may include matched savings programs, financial education or access to a bank account and other mainstream financial services.
EITC Awareness Day
January 29 marked National EITC Awareness Day, and provided an excellent opportunity for cities to publicly launch their efforts. The City of Baltimore hosted a press event featuring a high-profile panel of state and local leaders, including Reps. Elijah Cummings (D-Md.) and John Sarbanes (D-Md.), Maryland Comptroller Peter Franchot and Baltimore Mayor Stephanie Rawlings-Blake. The city used the event to raise awareness about the EITC and to unveil new locations for community VITA sites.
“We consider our EITC campaign and our VITA sites to be an integral component of Baltimore’s overall family economic success strategy,” said Joanna Smith-Ramani, director of Baltimore’s CASH Campaign. “The EITC is a proven poverty reduction tool, so we are serious about getting the word out to our residents. We made this event as high profile as we could and really hope to see an uptick in VITA site visits and EITC returns.”
The City of Bryan, Texas, began its EITC outreach before tax season. In partnership with the local United Way, the city recorded a bilingual public service announcement and began airing it on cable access and local television stations in December. Based on the number of VITA site appointments already scheduled, the city expects to at least double the number of residents served from last year.
Reaching More Residents
According to the IRS, one in four eligible residents fails to claim the EITC every year. Typically, the populations who tend to be most excluded from this tax benefit are workers without qualifying children, people whose earned income falls below the threshold required to file a tax return, farmers and rural residents, people with disabilities and nontraditional families such as those in which grandparents are raising grandchildren.
In order to reach these residents, cities may want to consider a variety of strategies along with their usual EITC campaigns. For example, mobile VITA sites could be sent to rural areas, or cities can provide transportation to the nearest VITA site for rural residents and those with disabilities. To reach individuals with very low incomes who may not have to file a tax return, cities can partner with food banks, shelters, job placement agencies and other providers serving low-income or unemployed residents to get the word out on this important benefit.
Details: To download NLC’s toolkit for municipal leaders on Maximizing the Earned Income Tax Credit and for more information about strategies to help families achieve financial stability, visit www.nlc.org/iyef or contact Sarah Bainton Kahn at (202) 626-3044 or bainton@nlc.org with questions.
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