| Fighting Poverty With
a New Partner
VITA centers offer free tax help to people whose incomes
are $35,000 or less. |
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Thousands of people who want to buy a house, go to college,
open a small business, and save for their futures need help.
The earned income tax credit (EITC) is money—a way to
offset federal taxes paid by low-income wage earners—that
may be used to meet their families' basic needs. The
EITC has become the largest cash or near-cash program available
to low-income families in the United States, making it a
cornerstone of the nation's antipoverty effort. The effectiveness
of the EITC depends, in part, on whether those who are eligible
for the credit actually claim and receive it. The Volunteer
Income Tax Assistance (VITA) program, sponsored by the Internal
Revenue Service (IRS), works with community organizations
to provide high-quality tax preparation services, free of
charge, to low-income tax filers.
The Community Capacity Development Office (CCDO) has partnered
with the IRS to establish VITA centers in Weed and Seed Safe
Havens and to bring free tax services to families, increase
their disposable income, and assist them in meeting their tax
obligations and claiming their eligible tax credits. VITA services
are provided to residents on a one-to-one basis.
Three pilot sites have been selected for the 2004 tax year
in Gastonia, NC; Phoenix, AZ; and Grand Rapids, MI. The sites
were selected based on a cross-reference with strong IRS and
Weed and Seed support systems, geographic and demographic distribution,
and local site interest in neighborhood revitalization and
economic development activities. The overall target for the
CCDO and IRS partnership is to launch VITA centers in 50 Weed
and Seed sites by 2006. CCDO also is actively working to build
the savings of these families by connecting them to other asset-building
programs such as individual development accounts (IDAs).
The VITA centers offer free tax help to people whose incomes
are $35,000 or less, many of whom are eligible for untapped
EITC and childcare tax credits that can generate up to an additional
$4,000 plus $1,000 for each child. Research shows that low-income
individuals are motivated to save but have difficulty in accumulating
enough capital to make major investments or purchases. This
partnership will make it possible for individuals to convert
increased income tax returns into IDAs where their savings
are matched by other investment dollars, increasing their capacity
for home ownership and business development.
The CCDO/IRS partnership contributes to the EITC initiative
and assists Weed and Seed sites by—
- Hosting free tax preparation sites.
- Marketing EITC to eligible individuals and families.
- Providing information and resources to link free tax
preparation with other government programs such as those
involving food stamps and reemployment, as well as information
on home ownership and financial literacy.
- Training volunteers to prepare taxes.
- Providing computers for tax preparations.
Other benefits to the Weed and Seed sites include information
on additional government programs, tax preparation software,
in-kind promotional services, volunteers, funding, information
on and knowledge of asset development and financial literacy,
and free tax preparation services for residents. The EITC can
have an extremely positive and measurable impact on families
throughout the nation.
Each interested Weed and Seed site will be asked to identify
a location for the VITA center—preferably their Safe
Haven—that has access to computers and the Internet and
to recruit community volunteers to staff the center. The IRS
provides guidance on how to identify appropriate center volunteers
and also will assist in tracking the number of families served,
number of dollars these families save through the EITC, and
number of tax returns filed as compared with previous years.
The Milwaukee Asset Building Coalition is a citywide program
that represents a combination of financial education, VITA
centers, IDAs, and partnerships with lending institutions to
increase assets for low-income individuals. It is run by the
Social Development Corporation, the fiscal agent for Weed and
Seed in Milwaukee. In 2003, Milwaukee increased its citizens'
filing of tax returns under its special initiative by 23 percent
to $11 million dollars. Twelve locations citywide provide services
to implement the strategy. One of those, the Spotted Eagle
High School, is located in a Weed and Seed site, and three
are located in former Weed and Seed sites. Sue Knealy, Site
Coordinator for Milwaukee, said, "This initiative is
generating real dollars for low-income individuals."
The CCDO/IRS partnership is expected to generate significant
individual assets for Weed and Seed residents. These assets
will promote greater neighborhood economic and social stability
through increased home ownership, business development, and
education levels, which will result in an increased quality
of life for families and the community as a whole. Sites will
be able to identify specific outcomes for the increased number
of returns generated for residents, the increased amount of
dollars generated by those tax returns, and how those returns
are leveraged for additional savings and investment.
CCDO will train interested sites at the Application Kit Training
and the National Conference in 2005. In addition,
sites can e-mail Sonia
Klukas if they are interested in being considered for the
next round of sites to launch VITA centers.
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