Creating Real Economic Impact for People with Disabilities Earned Income Tax Credit Disability Initiative Campaign Disability Initiative started late 2004 with partnership with HHS Office on Disability and National Disability Institute (NDI). Currently, we have National Partnerships with following Disabled organizations: Easter Seals Independent Living Centers-NCIL Goodwill The Arc of the United States United Cerebral Palsy World Institute on Disability (WID) Publication 3966 (Living and Working with Disabilities) created for Outreach The Arc of the United States National Convention San Diego, CA October 14, 2006

Stakeholders Partnership, Communication and Education (SPEC) Mission Statement: “To assist taxpayers in satisfying their tax responsibilities by building and maintaining partnerships with key stakeholders, seeking to create and share value by informing, educating, and communicating with our shared customers.” SPEC has a shared mission with many of our partners including disability partners

What is SPEC? SPEC is the Outreach and Education Function Of Internal Revenue Service’s Wage and Investment Division. SPEC’s Approach is to Combine Resources and Goals With Other Organizations for Better Access to Lower Income Populations In Local Communities. The SPEC business model incorporates an indirect approach to community outreach and tax assistance, emphasizing collaboration with other organizations and naming relationship management as a key business strategy. In just over 5 years SPEC has established over 60 national partnerships and has worked with communities to build 301 coalitions, representing thousands of local organizations. Life of their own The range of community-based coalitions now in various stages of development shows dramatic promise in terms of the impact gained by so many diverse organizations working as a team. Building on mutual interests and benefits translates to greater help for more individuals at increased efficiency.

Elderly (over 60 years of age) Limited English Proficient Disabled SPEC Key Customers Low to Moderate Income Elderly (over 60 years of age) Limited English Proficient Disabled We now work with all four groups and have implemented strategies for each target segment by 2007.

Earned Income Tax Credit The EITC is the largest federal aid program benefiting working families: Over $40 Billion to 21 Million Working Families and Individuals EITC is approximately equal to Temporary Assistance for Needy Families (TANF) and Food Stamp Programs combined (in total dollars) Ten times the size of the Community Development Block Grant (CDBG) program

Earned Income Tax Credit The EITC is the most effective anti-poverty tool for working families Lifts over 5 million individuals out of poverty each year, including 2.6 million children Has ability to turn a $7 per hour job into an $9 per hour job 2006 Tax Year Benefits up to $4,536 for families with 2 children and $412 for individuals with no children

What Does EITC do for Working Families? 2006 EITC maximum refund amounts: Up to $4,536 with 2 or more qualifying children Up to $2,747 with 1 qualifying child Up to $412 with no qualifying child Maximum Credit Example TY06: MFJ The maximum credit available when Earned Income is: No Qualifying Child $ 5,200 –$ 6,600 = $ 412 1 Qualifying Child $ 7,800 - $16,500 = $ 2,747 2+ Qualifying Children $11,000 - $16,500 = $ 4,536 To get at least $1,000 of EITC the least & most you can earn HH or QW is: 1 Qualifying Child $ 2,950-$ 24,750 2+Qualifying Children $ 2,500-$ 30,500 To get at least $1,000 of EITC the least and most you can earn as MFJ is: 1 Qualifying Child $ 2,950-$ 26,750 2+Qualifying Children $ 2,500-$ 32,500

Why is EITC Important to Individuals and Families? Helps Individuals Keep Working and Care for Themselves and Their Children by Allowing Them to: Pay For Reliable Transportation Secure Convenient Child Care Options Cover Medical Expenses Buy Food and Other Basic Necessities Keep Current on Rent and Utility Payments

EITC and the Disabled EITC provides $$$ to the working disabled without negatively affecting other benefits (SSI, etc.) EITC can be claimed even if no tax return is required to be filed Children with disabilities qualify with no age restrictions

Earned Income Tax Credit Now That We Know What EITC Is and Why EITC Is So Important – What Can Be Done to Assist People with Disabilities and Their Families?

Community Based Partnerships Awareness and Education Asset Building So what are we (IRS) doing about it? Community Based Partnerships model By this we share a common interest: Helping the working poor find family economic success. This model is a three-prong approach: Outreach, Awareness and Education Free tax preparation, and Building assets such as Individual Development Accounts (otherwise known as IDA’s) and home ownership Each of these provides a valuable opportunity alone, but they are most powerful when linked together. Community-based coalitions help not only individual families but entire communities by multiplying the effects of the services. By identifying mutual interests, organizations working together have much greater access to taxpayers and can offer the important intangibles of credibility and trust. Community- Based Coalitions Tax Preparation

Why is Tax Education Important for Persons with Disabilities? Many People with Disabilities are not Aware of EITC Concerns over Interaction of Disability Benefits and Tax Filing Missing out on other Tax Benefits and Credits We are working to help take the fear out of filing by getting the word out how EITC credits and other refunds interact with public benefits such as SSI, SSDI, Food Stamps, TANF, Medicare, Veteran’s benefits, etc. Center on Budget and Priority Policy (CBPP) has already produced a PowerPoint on this subject and added a section to their annual EITC Toolkit

Why Are Tax Preparation Services Important to Persons with Disabilities? Complexity of Tax Law Tax Preparation Fees Erode the Value of Refunds Must File if They Have Earned Income to Receive Refunds of Credits/Withholding Opportunity to Link to Asset Building Strategies Organizations can work together to offer free tax return preparation assistance in their communities. Brookings Institute - $200 on average per tax return Free tax prep gives us the opportunity to ensure that all credits are received. You can help working families with free filing of their tax returns.

Why are Asset Building Opportunities Important to People with Disabilities? 54% of People with Disabilities have no Savings Accounts and 69% do not have a Checking Account 33% of Adults with Disabilities Live in Households with Total Income of <$15,000 Compared to Only 12% of those without Disabilities 58% of People with Disabilities are Asset Poor (Do not have enough resources to live at the Federal Poverty Level for three months) Development of assets is the key to development of poor households. The pathway out of poverty is not through consumption but through savings and accumulation of assets. When people begin to accumulate assets, their thinking and behavior changes. Consider the following statistics:* Over 10 million families are unbanked 50% of unbanked households are headed by persons under age 45 33% have no or negative financial assets Comprises 46.9% of all children One out of three have no retirement savings 78% of college students have at least one credit card *Source of statistics: National Summit on Economic & Financial Literacy (May 13-14, 2002 - Washington, DC) Building Assets (Corporation for Enterprise Development/CFED; December 2001 Publication) Progressive Policy Institute Case Study - "Taking the Poor Into Account" written by Anne Kim for the Federal Reserve Board) Sources: 2004 N.O.D/Harris Poll & 2000 U.S. Population Census

Volunteer Income Tax Assistance VITA – Free Tax Preparation Saves $100 to $300 in tax preparation fees Quick refunds via direct deposit- avoids costly Refund Anticipation Loans $50 - $100 No check cashing charges 1%-3%

VITA National Numbers VITA in 2000 (SPEC First Year): VITA in 2006: 1,127,362 free tax preparation 52% Electronic Filed returns VITA in 2006: 2,247,280 free tax preparation 83% Electronic Filed returns SPEC started out in 2000. FREE TAX PREPARATION has doubled. E-FILE has increased from ½ the population to over 4/5 of the population is electronically filing. It is faster, FREE (if done by a VITA site) and mistake free

Economic Impact of the EITC on San Diego County Tax Year 2004 171,649 returns claiming EITC Received refunds = $ 294,497,713 173,821 returns with EITC (2,218 disallowed < 2%) The other 171,649 generated $ 294,497,713 in refunds 22% were single, 31% not claimed prior year 72% done by paid preparers 2% done by VITA One of the most successful is the San Diego Countywide EITC Coalition whom we’ll look at next.

San Diego Countywide EITC Coalition 2005 – Return Refunds: 5,162 Total Returns = $ 7,119,610 2,332- EITC Claimed = $ 3,883,965 Preparation Fees Saved = $ 774,000 Over $7 Million Brought Back Into the Community Using VITA This is an example of what a mature coalition can accomplish. Note: These numbers are from the partners computer software and therefore is more up to date (TY2005) than the previous slide. 23 VITA sites in mature (four year old coalition) Nine primary members with 14 additional partners Targets working families 92% e-filed At $150 per return, an estimated $ 774,300 in tax preparation savings (more if RALs factored in) Refund Anticipation Loans. The value of not having to deal with the IRS because their return was done correctly cannot be underestimated. It does take special training and knowledge to do the EITC correctly.

TAX FACTS+ Campaign TAX FACTS+ Campaign (link persons with disabilities and their families to free tax preparation and asset building services) Expanded to 54 Cities in 2007 Over 100 cities by 2008 The purpose of the TAX FACTS campaign is to build knowledge and utilization of favorable tax provisions and financial education for individuals with disabilities, their families and employers to empower and advance self-directed economic security. TAX FACTS is a three-year multi-faceted national campaign that will empower 36 communities working with persons with disabilities to participate and expand their knowledge and utilization of favorable tax benefits and financial education services. TAX FACTS will direct needed public attention to the advancement of economic freedom and full community participation of persons with disabilities. The campaign has three parts that include materials development and dissemination, training, and technical assistance activities. (Hand out TAX FACTS+ flyer)

Activities and Outcomes NATIONAL PROGRAM Increased number of tax filers with disabilities by 330%. 5,211 tax filers in 2005 17,233 tax filers in 2006 Over 200 disability partners engaged in 2006 342,554 outreach contacts made in 2006

Successes Wichita West Palm Assisted 340 People With Disabilities in 2005 Prepared 56 Tax Returns for People with Disabilities that had no Filing Requirements West Palm Distributed 150,000 Copies Regarding Their Tax Campaign that Included Information about Accessible Sites. Prepared 559 tax returns for People with Disabilities 340 includes Kansas and sales tax returns (over $7,000 in EITC rec’d for 56 returns)

What Can Your Organization do to Help? Provide EITC outreach Join Existing Coalition Efforts Become Part of The Disability Workgroup Educate Clients Educate Employees Become a Free Tax Preparation Site You can help promote tax credits in your community by using your communication network so that more eligible people receive tax credits, bringing more dollars into your community. If your group is looking for ways to get involved in this local area, VITA is one of the best ways to get your foot in the door. Other ways are: Host Disability Meetings Take Leadership Role Conduct a filing season Kick-off event Issue a Mayoral proclamation Develop or donate publicity Adopt a VITA site Provide speakers on asset building Sponsor a bank account program that offers matching funds.

Resources www.mastermymoney.org (NDI website for TAX FACTS+) www.irs.gov/pub/irs-pdf/p3966.pdf (IRS Disability Brochure) www.irs-eitc.info/SPEC (IRS site on EITC) www.cbpp.org/eic2006 (Center on Budget and Policy Priorities site and Access to EITC Toolkit) www.tax-coalition.org (National Tax Coalition site) www.brookings.edu/urban/eitc (Brookings Institution)

Contact Information If you have questions, need additional information or would like to receive EITC or any other educational materials, please contact: Richard Keeling – Senior Tax Analyst 404-338-8814 Richard.Keeling@irs.gov (e-mail) 401 West Peachtree Street STOP 53WI Atlanta, GA 30308