"Harrison,
I am working on some legislation you and others in Buffalo (and your local legislators) might be interested in. It concerns lower income individuals who are eligible for the Earned Income Tax Credit (EITC) when filing state and federal tax returns. The EITC is largely geared to help families with children. A family with two children is eligible for the EITC if the income is under about $35,000.
Research indicates that a high percentage of these individuals (Albany has some of the highest percentages in NYS as does Buffalo) use fee-based tax preparation services to obtain their refunds. In order to pay the fee they often end up taking out a loan called a Refund Anticipation Loan (RAL) at interest rates of up to 700%. The tax preparation fee combined with the fees for the loan end up costing between 15%-20% of the average refund check of an EITC eligible individual. An example is a single parent of two making $28,000 and eligible for a $1600 refund, who ends up paying $265 for tax prep fees and a RAL.
The EITC should be going directly into the pocket of these citizens and instead they are being preyed upon by these tax preparation businesses. In addition, it is money that is not going into our local economy. It is no coincidence that you tend to see a lot of these tax prep places in lower income neighborhoods. One zip code near PUSH (14208 zip code) has one of the highest rates of people eligible for the EITC who use fee-based tax prep places in NYS and 1 out of every 2 of these folks uses a RAL in the process.
There is legislation at the state level and federal levels that doesn’t seem to be moving and, from what I can tell, does not preclude legislation at the local level. NYC passed legislation several years ago requiring full disclosure and posting of all fees to customers by tax prep places as well as notification that they can receive their full refund from the IRS in less than ten days if they have a bank account with direct deposit. They are also required to give customers a Taxpayers Bill of Rights that informs them about RALs and fees and warns them of illegal practices to avoid. As a result of the NYC legislation, the percentage of EITC eligible individuals applying for RALs in low income neighborhoods in NYC is LOWER by upwards of 20% than that of individuals from Albany and Buffalo’s low income neighborhoods.
I have attached a few different documents for you to look at. One is an informative report on the issue by the Children’s Defense Fund. I have also attached the NYC’s Consumer Bill of Rights and the draft of my resolution which I hope to be introduced shortly here in Albany.
Hope all is well with you and Colin! I don’t know if Colin told you but we are probably coming out to visit this coming weekend and staying over at a hotel Sat. night. We will try to bring whatever furniture, lamps, etc. we can fit in the car.
Love, Mom
BAM!
Research indicates that a high percentage of these individuals (Albany has some of the highest percentages in NYS as does Buffalo) use fee-based tax preparation services to obtain their refunds. In order to pay the fee they often end up taking out a loan called a Refund Anticipation Loan (RAL) at interest rates of up to 700%. The tax preparation fee combined with the fees for the loan end up costing between 15%-20% of the average refund check of an EITC eligible individual. An example is a single parent of two making $28,000 and eligible for a $1600 refund, who ends up paying $265 for tax prep fees and a RAL.
The EITC should be going directly into the pocket of these citizens and instead they are being preyed upon by these tax preparation businesses. In addition, it is money that is not going into our local economy. It is no coincidence that you tend to see a lot of these tax prep places in lower income neighborhoods. One zip code near PUSH (14208 zip code) has one of the highest rates of people eligible for the EITC who use fee-based tax prep places in NYS and 1 out of every 2 of these folks uses a RAL in the process.
There is legislation at the state level and federal levels that doesn’t seem to be moving and, from what I can tell, does not preclude legislation at the local level. NYC passed legislation several years ago requiring full disclosure and posting of all fees to customers by tax prep places as well as notification that they can receive their full refund from the IRS in less than ten days if they have a bank account with direct deposit. They are also required to give customers a Taxpayers Bill of Rights that informs them about RALs and fees and warns them of illegal practices to avoid. As a result of the NYC legislation, the percentage of EITC eligible individuals applying for RALs in low income neighborhoods in NYC is LOWER by upwards of 20% than that of individuals from Albany and Buffalo’s low income neighborhoods.
I have attached a few different documents for you to look at. One is an informative report on the issue by the Children’s Defense Fund. I have also attached the NYC’s Consumer Bill of Rights and the draft of my resolution which I hope to be introduced shortly here in Albany.
Hope all is well with you and Colin! I don’t know if Colin told you but we are probably coming out to visit this coming weekend and staying over at a hotel Sat. night. We will try to bring whatever furniture, lamps, etc. we can fit in the car.
Love, Mom
BAM!
2 comments:
<3
Cathy Fahey really is the greatest.
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