TAMPA -
That was exactly the point one IRS employee was trying to make when he opened his presentation at the NCUA Economic Empowerment Summit hosted by NCUA Board Member Gigi Hyland.
"I'm Mike Wade from the IRS and I'm here to help."
After the inevitable burst of laughter subsided, Wade said he always starts his talks in this fashion to demonstrate that the American public won't accept that the IRS is out to help anyone, which proves the need for the tax collecting agency to partner with community groups and organizations such as credit unions to provide free tax preparation.
Wade said the Volunteer Income Tax Assistance (VITA) program offers low- to medium-income individuals or families with free tax preparation given by trained volunteers, many who work for the American Association of Retired Persons (AARP). CUs can form an alliance with an existing VITA group such AARP, the United Way or community coalitions such as the Center for Economic Progress in Chicago.
Credit unions can help members, bring cash back into their communities and expand services to the underserved with a free tax filing program. Another aspect of free tax services in the benefit of the Earned Income Tax Credit (EITC) that the IRS defines on its website as: "a refundable federal income tax credit for low-income working individuals and families. Congress originally approved the tax credit legislation in 1975 in part to offset the burden of social security taxes and to provide an incentive to work."
Wade said the EITC are for tax filers who make less than $38,348 for the 2006 tax year, and depending on income and children, can get up to $4,536 in refund money. During 2006, Wade said more than 21 million working families and individual filers received $38 billion in EITC, with an average refund of $1,700.
Wade said if a credit union has a free tax refund "day" or campaign in February or March, it's a great chance to sign up new members or increase the deposit share of existing members with a simple question.
"What are you going to do with all that money?" Wade said CUs should ask members getting a refund. "You're doing more than just tax returns."
Wade said even a citizen who owes the government nothing still has to file a return to get an EITC. The EITC money is refunded directly to the taxpayer with any owed money taken out. For example, a filer who qualifies for a $1,700 EITC refund, but owes Uncle Sam $500 will in turn get a check for $1,200. Wade said up to 25% of filers fail to claim their EITC benefit and CUs can help them get it.
As further proof of the need and value of free tax help, Wade said many EITC recipients find preparing a return too confusing or daunting and on a national level, 71% of all EITC filers used a paid preparer to complete their returns. Wade said CUs should offer tax return preparation, talk about the EITC, get them to open an account and move onto direct deposit and savings accounts once credit union/member trust is established. Nationwide, Wade said 142 credit unions are active in EITC and VITA programs, "Join an existing group. If not, you can start one. I have kits for that," Wade said.
While too late for this tax season, the VITA and EITC programs are well established nationwide and plenty of help is available, including NCUA technical assistance grants that totaled $166,000 in 2006, according to NCUA staffer Gary Kohn.
"It's very easy to do and provides a benefit to the membership," Kohn said.
For more on the NCUA's summit, see related story, page 1.
