You asked for information about a successful Bridgeport Earned Income Tax Credit (EITC) outreach campaign. You also wanted to know about states that have initiated statewide EITC campaigns.

A copy of an earlier OLR report (2005-R-0164), which discussed outreach activities in Illinois, Michigan, Texas, and Washington, is attached.

We will continue to survey states and will present our findings in subsequent reports.

SUMMARY

During the last two tax seasons, the Connecticut Association for Human Services (CAHS) worked with community organizations in Bridgeport to increase the number of locations where low-income families could get free help with tax preparation, including access to the federal EITC. The number of returns filed more than tripled in the first year, and increased seven fold in the second.

A number of states have either initiated EITC outreach efforts or supported those already in place. The treasurers of Delaware and North Carolina have been involved with those states’ efforts, and North Carolina banks’ commissioner initiated and funded tax preparation assistance for low-income taxpayers, including EITC outreach, there.

BRIDGEPORT’S EITC CAMPAIGN

Two years ago, CAHS received a grant to run a family economic security program in Fairfield county. CAHS won the grant because it had worked successfully with Volunteer Income Tax Assistance (VITA) sites. These sites, staffed by volunteers trained by the Internal Revenue Service, offer tax preparation help to lower-income taxpayers and those with no tax liability who are eligible for refundable tax credits such as the EITC.

CAHS worked with one VITA site in Bridgeport, FSW, to get additional community nonprofit agencies to help with tax return assistance. Jim Horan, CAHS’ executive director, reports that the number of agencies helping with tax assistance rose to seven in 2003, then to 11 in 2004. With these additional sites, the number of returns processed went from 200 when FSW alone provided the assistance, to 700 for the 2003 tax year and 1,500 in the 2004 tax year. (Horan noted that not all individuals receiving assistance qualified for the EITC, but many did. )

OTHER STATES’ CAMPAIGNS

Delaware

Earlier this year Delaware’s treasurer, Jack Markell, in conjunction with a state senator and a community development agency, Nehemiah Gateway Community Development Corporation in Wilmington, announced the state’s fourth annual EITC campaign. Nehemiah coordinates the campaign, which promotes work by increasing the number of low-wage workers who claim the EITC. (We are still waiting to hear how the campaign works and will forward this information to you once we receive it. )

These campaigns have increased EITC participation rates since they began in 2001 (2000 tax year), as illustrated in Table 1.

Table 1: Delaware EITC Campaign Results

Source: Brookings Institution (2004)

(The 2005 Delaware legislature enacted a state EITC, a nonrefundable credit, which benefits low-income residents who have tax liability but not those who do not pay income tax. )

North Carolina

Ellen Richardson of State Treasurer Richard Moore’s office reports that the state’s banks commissioner approached her office two years ago with an offer to provide funding from banking fee revenues to pay for additional VITA sites. Seen as an asset building initiative, the partnership has enabled an additional five or six tax preparation sites to operate each tax year. The treasurer has publicized the sites in the communities and visits them during tax season.

Moore’s website touts the partnership between his agency, the banks commissioner, the Self-Help Credit Union, EITC Carolinas, and community organizations in making VITA sites available. The website, www. treasurer. state. nc. us, also includes a credit calculator and information about EITC Carolinas. Moore also wrote an opinion editorial for the newspaper, informing readers of the credit and urging taxpayers, businesses, and others to spread the word about the EITC’s availability.

Most recently, North Carolina governor Michael Easley called for “Tax Help for Working Poor Families,” from January 15, 2005 through February 15, 2005. In his proclamation, the governor pointed to the low rates of working families claiming the credit and the importance of these credits for both families and the communities in which they live.

EITC Carolinas. Easley also referenced the EITC Carolinas program, which is a two-state outreach initiative. EITC Carolinas is run by MDC, a nonprofit, anti-poverty organization based in North Carolina. It is essentially a resource network that supports community volunteer groups in North Carolina and South Carolina that help families prepare their taxes and claim the EITC. While the state has VITA sites and existing programs to help, this program centralizes the resources. Annie E. Casey Foundation money enables the initiative to offer free memberships, which includes providing access to free resources (e. g. , website), training, and promotional materials.

On its website, the program asserts that North Carolina taxpayers alone lose between $ 93 million and $ 176 million each year because they fail to file for the EITC. And those who file may not get as much as they should because they are paying a tax preparation agency high fees to help them get the credit.

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