The Wisconsin Credit Union League is partnering with the Wisconsin Department of Revenue to prevent low-income tax filers from becoming prey to unscrupulous lenders.
Starting in January, CUs will offer assistance with refunds to Volunteer Income Tax Assistance (VITA) sites throughout the state, said Jim Drogue, VP of League Operations at the Wisconsin league.
"We are also asking credit unions to consider providing some space in their office for VITA sites," Drogue said. "That would give (VITA customers) the ability to talk to an employee and set up a savings accounts with their tax returns."
Drogue said the league's goal is to have member credit unions help low-income taxpayers who might otherwise fall prey to predatory lenders that offer quick refunds at high prices.
According to the DOR, predatory lenders charge about $258 per tax return, Drogue said. That includes the fee for a Refund Anticipation Loan, money borrowed against the tax return.
Drogue said the average tax return is $1,500 for those individuals-typically low income, low wealth and some senior citizens. "Most are very basic," he said. "When you compare it to going to a regular tax preparer, they are being way overcharged."
Drogue said DOR Secretary Michael Morgan proposed the partnership with the Wisconsin league after reading about its work on payday lending with the Department of Work Force Development's Task Force and the Filene Research Institute.
"The DOR heard about some of our efforts and initiatives to work with the underserved and wanted to see if we would be interested in some potential opportunities to work in partnership with them."
He said league officials liked the idea and immediately put a call out to its member credit unions to participate.
"Wisconsin is one of the leaders and very aggressive as it relates to helping credit unions in their ability to serve the underserved," he said. "We think this is just another part of the process...that allows credit unions help consumers become more financially literate and better able to handle their money."
Under the proposed arrangement, IRS-trained DOR volunteers would assist with tax reports and let CU staff handle refunds and offer financial services.
