Cities Promote Tax-Time Saving With EITC Outreach Strategies

February 20, 2012

by Tim Mudd

Cities across the country are partnering with community organizations this tax season to raise awareness about the Earned Income Tax Credit (EITC), one of the nation's largest anti-poverty programs. The EITC is a refundable tax credit that provides a yearly boost to family finances for low- and moderate-income wage earners. Last year alone, more than 26 million workers received nearly $59 billion in EITC refunds.

As in years past, millions of workers qualify for the EITC this year, but as many as one in four may fail to claim the credit because they are unaware of their eligibility. In an effort to reduce the number of families who miss out on this tax credit and the chance to attract untapped federal dollars into their local economies, municipal leaders are once again implementing targeted outreach strategies, hosting events and providing opportunities for free tax preparation services through Volunteer Income Tax Assistance (VITA) sites.

Implementing Targeted Outreach Efforts

Under the leadership of Mayor Gregory Ballard, the City of Indianapolis takes free tax preparation services directly to residents at more than 40 locations through its partnerships with community organizations, corporations and educational institutions. Using VITA-certified volunteers, Indy's Campaign for Financial Fitness (ICFF) assists more than 5,000 individuals and families in claiming the EITC.

VITA sites include a number of local community centers, a utility company customer service office, two credit unions and a major hospital group, with each providing regular days and times for tax preparation. ICFF volunteers also conduct direct outreach to residents who are least likely to travel to VITA sites, reaching residents at senior apartment communities, Indianapolis' Project Homeless Connect event, ex-offender work sites and other identified locations.

The city's efforts save program participants an estimated $780,000 in tax preparation fees normally collected by paid tax preparers and help residents get the credits they deserve.

"The City of Indianapolis does not wait for community residents to find essential services," said Ruth Ann Walker, Bank On Indy Coordinator for ICFF. "We work with our residents and partners to identify what their needs are and take those services directly to the community."

Raising Awareness with Tax Time Events

The City of Virginia Beach, Va., joined EITC advocates nationwide in celebrating EITC Awareness Day on January 27. This grassroots effort provides a local spotlight on the transformational power of the credit, while offering taxpayers with household incomes of less than $49,000 free tax preparation assistance.

Promoting tax time savings is a major component of Mayor William Sessoms' "500 Families Financially Fit for the Future" program, which aims to position residents for greater financial success and open new opportunities for them to take control of their financial lives. Last week, the city continued its efforts to support financial well-being by partnering with the local Youth Career Center to hold its second event to assist residents in claiming the EITC.

In addition to free tax preparation, Super Saturday, held on February 18 at the local Youth Career Center, familiarized residents with electronic tax-filing software and connected them with financial counseling, budgeting tools and opportunities to learn about safe and secure financial products. Virginia Beach leaders believe these events are important to placing families on a sound financial footing in a still-recovering economy.

Using Tax Time to Bring Residents into the Financial Mainstream

Nashville Mayor Karl Dean worked with the United Way of Metropolitan Nashville (UWMN) and other local partners to launch the city's Bank On Music City program at one of the community's most successful VITA campaign sites. Bank On Music City is a community partnership of local banks, credit unions, government agencies and community organizations that seeks to connect unbanked and underbanked individuals with mainstream financial services.

Many low- and moderate-income taxpayers are targeted by paid tax preparers this time of year, offering costly products that promise fast refunds. One of the most common products is the refund anticipation check (RAC), which allows consumers to access their refund sooner through a temporary bank account. Consumers are typically charged $30 to set up the one-time-use account and are subject to additional fees.

The city and its partners recognized that launching the program at a VITA site is a perfect opportunity to educate and offer services that promote alternatives to fringe financial products.

"When more families become financially stable, it benefits the entire community," said Mayor Dean at the launch of Bank On Music City. "By offering individuals financial alternatives, we will help them succeed."

Details: To download the EITC Toolkit created by NLC's Institute for Youth, Education and Families, visit www.nlc.org/find-city-solutions/iyef/family-economic-success/work-supports-public-benefits. For more information about EITC outreach strategies, contact Laura Fischer at (202) 626-3056 or fischer@nlc.org.