Attached to a post outside a Volunteer Income Tax Assistance (VITA) site in Camden, N.J., this past winter was an ad for a recognizable financial services company offering tax preparation for the people in that particular low-income area – for a charge likely around $300.
Inside that building, the Internal Revenue Service (IRS) was training a dozen or so volunteers to help the same taxpayers claim Earned Income Tax Credits (EITC) and other savings on their tax returns – for free.
Unfortunately, the ad had been there for weeks before those volunteers, mostly employees of area nonprofits, had started their training. And many low-income workers had already gone to the commercial outlets to get rapid refunds before the Camden program was up and running.
Though Camden’s steps may have been a little late this year, its program is moving toward the next tax-filing season. And, programs in that city and well-established programs in Chicago have led the IRS, fresh into its customer-focused reorganization, and the Annie E. Casey Foundation in Baltimore, to develop partnerships among grassroots nonprofits, corporations, foundations, and government agencies and politicians.
The nascent partnerships are looking to local nonprofits as volunteer resources and recruiters. Approximately a dozen IRS employees attended the recent National Community Service Conference in Minneapolis seeking information about connecting to volunteer resources and developing further partnerships.
Together, these groups are trying to help low-income taxpayers, those with disabilities, non-English-speaking and the elderly with free tax preparation.
Mark Pursley, director of the IRS’s new stakeholder partnership, education and communication (SPEC) division, said the program is being developed in Milwaukee, as well as Seattle, New Orleans, and Baltimore. Similar programs are underway in Denver, St. Louis, Minneapolis, Camden, and the Cherokee Nation. The program in Milwaukee combines aspects of the VITA program and the distribution of financial literacy information.
He added, “One of the new pieces is the asset allocation, or the financial piece around the individual development accounts (IDAs),” he said. “The power of this model is taking these legacy programs and putting them together … in a model that is very new.”
Pursley said the agency sees this as a long-term program. “Where we have a number of partnerships, most of them being relatively small, in three-to-five years there will be a whole series of community-based or coalition-based partnerships,” he said, targeting as many as 22 cities in a year. “I think there will be an increasing and interlocking set of partnerships.”
Just less than 85 percent of Milwaukee workers eligible for EITC claimed the tax credit in 1998, according to the Social Development Commission (SDC) there. An estimated 19.4 million people claimed EITC in 1998, the last year for which data is available, lifting some 4.8 million people above the federally set poverty line, according to IRS statistics.
A family might receive about $1,400 with EITC program, said Deborah Blanks, SDC’s executive director.
The SDC, a 501(h), had developed a relationship with a local bank that was looking to increase new accounts among people who’d never held accounts, when the IRS approached her about this partnership. “We all sort of added extra dimensions to what the project could be,” Blanks said.
Having worked with Casey, the IRS, and local, state and federal level politicians, SDC is launching an effort to recruit as many as 400 new volunteers. Through the new recruits and new VITA sites, the groups will serve people in two distinct areas of Milwaukee.
Blanks said the Milwaukee program is developing sites in two neighborhoods – a predominantly African-American area on the north side and a south-side area that includes a mix of Latino, African-American, Native-American, Caucasian, and Asian-Americans.
Blanks, whose organization was spawned out of President Lyndon Johnson’s war on poverty during the 1960s, said nonprofits would be the base of the effort, which will rely on recruiting from local companies as well as organizations and government.
“We believe we have the capacity now, and have shown the ability to process more than 10,000 tax forms,” she said, noting the production with 100 volunteers. “What we’d like to see is at least a 50 percent increase (in forms processed). … It’d be great if we could reach 20,000.”
Increasing the number of eligible workers who claim EITC refunds by 10,000 workers in 2002 could bring $14 million to Milwaukee county annually, boosting the local economy, she estimated, which is one reason why the city’s mayor and congressman are strongly supportive of the program.
Blanks said some of the volunteer recruitment could be through utility bill inserts and other direct approaches to consumers, such as grocery bags. In addition, the tax preparation sites need “to engage residents looking for free tax preparation. There has to be a commitment here, trained volunteers, reasonable hours, a willingness to look at computerized preparation for tax filings.”
Blanks said it will likely take around $400,000 “to really be able to do the job and get the word out. … Some of that definitely can be in-kind contributions,” such as public relations assistance and computers.
Amanda Fernandez, a program associate at the Annie E. Casey Foundation who has been working closely with the Milwaukee group as part of its Making Connections program, said Casey’s interests stem from its goal of bringing together existing resources to improve outcomes for children and families. The foundation is aware of poor neighborhoods around the country that aren’t accessing and using EITC to its full benefit.
“The obvious missing link is making sure the IRS is working with the folks on the ground,” she said. With such high-quality tax-preparation services and through opening savings accounts, the tax payer can convert the tax credits to cash while limiting the transaction costs. “This allows them to build assets and financial futures.”
“This is a learning experience for us. We’ve never been in relationships (like this),” said Ron Smith, chief of the IRS’s large employer partnerships, wage and investment division. He said the IRS is hopeful the Milwaukee partnership will serve as a model. “We’re building the base,” he said. “You have to do an education, an outreach campaign. You’ve got to recruit volunteers. … There’s going to be a public announcement in January to let the citizens know this service is available.”
As learned in Camden, time is of the essence to making the program work. Cynthia Primas, a consultant working with Respond, one of the Camden-based human service organizations involved in the program, said the project wasn’t able to get off the ground in Camden until well into 2001. Getting the political support of a new administration and coordinating training schedules pushed the availability of the service into March and only reached about 100 taxpayers. “The mindset was the rapid refund,” Primas said. “As soon as they got their W2, they knew they could do the quick turnaround. The message of the earned income tax credit (and free tax preparation) was missed.”
She added, “We really need at this point a major emphasis on getting the word out to community much earlier. … Get the information in their paychecks, get it in front of them before they get their W2.”
But the groundwork for improvement was established, according to Kevin Hagood, a computer specialist with Respond’s Working Center in Camden. For years he’d earned extra money as a tax preparer through commercial outlets, and he volunteered extra hours before his usual working day. “I thought it was beneficial,” he said, particularly for the welfare to work clients. “A lot of the people qualified for the earned income tax credit. … They were telling a lot of their friends,” he added, estimating that word of mouth accounted for most of the people who came in.
Irene Skricki, a program associate at Casey, said the program in Camden was able to recruit and train upwards of 40 volunteer tax preparers. The foundation made a $35,000 EITC outreach grant to get VITA sites open. “It is volunteer driven,” she said. “You can do this relatively inexpensively.”
The IRS and the SDC acknowledge much was learned from the experience of programs at the Center for Law and Human Services, a nonprofit in Chicago that served as a model for the Milwaukee program. David Marzahl, executive director for the center, said the center has strong support for its volunteers and remains open all year. “Since we’ve had years to try other models, and grown from 1,000 (tax filings) to 10,000 … (we’ve learned that) if you really want to do a good job and work with volunteers, you have to keep in touch with them.”
The center has approximately 450 volunteers, starting in 1995 with just 40 volunteers. “There’s no question that volunteer time is at a premium. We do lose quite a few volunteers,” he said. “We can never have enough.” The center has 21 sites that process anywhere from 300 to 2,000 filings in the Chicagoland area. Though there are some accountants and lawyers, Marzahl said many of their volunteers are merely people comfortable with numbers who can spend a few hours a week. Among the volunteers are people from the local telephone company, scientific laboratories, and state and federal departments of human services.
Marzahl said the center started with a rather scattershot approach to recruiting, with letters to CEOs and placing PSAs on radio and television and placing stories in the newspaper. “The thing that seems to work the best is to find a person in a workplace setting,” he said. “Someone who’s really committed to the program, who through email and phone calls can really make things happen.”