March, 2004
The State EITC Online Resource Center is pleased to present its electronic newsletter on current policy developments around state and federal Earned Income Tax Credits. For more information, please go to: www.stateEITC.com. Additional information on the federal EITC can be found at: www.eitc.info.
Feel free to forward this newsletter to your interested associates and to email sarah@thehatchergroup.com with news, information or other resources to be added to the update. If you do not want to receive this newsletter in the future, please reply with the word UNSUBSCRIBE in the header.
In this edition of the policy update:
• Budget Resolution
Would Significantly Cut the Earned Income Tax Credit
• Utah Legislature Explores State EITC
• Rhode Island Looks to Make a Larger Portion
of Its EITC Refundable
• Indiana Works to Make State EITC Permanent
• EITC Legislation Proposed in Missouri
• New EITC Research Released at Major Policy
Briefing in Springfield, Illinois
• Members of Congress Encouraged to Maximize
Use of EITC in Their Districts
• New Brochure Highlights Results of Tax
Assistance Campaigns
• IRS Consolidates EITC Work, Broadens Outreach
• Department of the Treasury Produces An
Electronic Toolkit for Tax Preparers
• IRS Website Provides Resources for Organizations
that Work with EITC Taxpayers
• The Center on Budget and Policy Priorities
Releases New EITC Toolkit
• National Women’s Law Center Targets
Child Care Services Networks for EITC Outreach
• Web-based, User-Friendly Application Helps
Low-Wage Earners File for EITC
• New EITC Legislation Proposed in the House
and Senate
Budget Resolution Would
Significantly Cut the Earned Income Tax Credit
On March 4, Senate Budget Committee Chairman Don Nickles (R-OK) put forward
a budget resolution that, if enacted, likely will result in significant
cuts to the Earned Income Tax Credit. The Nickles budget resolution requires
the Senate Finance Committee to cut entitlements and specifically targets
Medicaid and the EITC. Medicaid spending is reduced $11 billion over five
years. The EITC cuts equal $3 billion over five years. The “Chairman’s
Mark” says that the EITC cuts in the resolution could be made in
either of two ways — by repealing the EITC for very poor workers
without children (which now benefits 3.7 million households) or, it appears,
by delaying EITC refunds for families for up to a year. The full Senate
is scheduled to debate and vote on the Budget Resolution during the week
of March 8. The Center on Budget and Policy Priorities is urging people
to contact their senators and tell them the cuts in the EITC and Medicaid
are unacceptable and urge them to vote against the Nickles amendment.
Go to: http://www.cbpp.org/3-4-04bud.htm
Utah Legislature Explores State EITC
The Utah legislature considered two bills that would have enacted a state EITC this year, a 5% nonrefundable credit and a 10% refundable credit that would have stepped down as income increased. The bills passed both houses, but despite a strong advocacy effort by Utah Issues and its coalition partners neither bill was funded because of the fiscal situation in the state. Nevertheless, both the Utah Tax Review Commission and The Revenue and Taxation Interim Committee have endorsed a state earned income tax credit, and the coalition has the support of some key conservatives. This makes the advocates optimistic for the EITC’s chances next year.
To view the legislation, go to: http://www.le.state.ut.us/~2004/htmdoc/sbillhtm/sb0238.htm
and http://www.le.state.ut.us/~2004/htmdoc/hbillhtm/HB0345.htm
To view a fact sheet, go to: http://www.stateeitc.com/documents/utah/Utah_Issues_Fact_Sheet.pdf
Rhode Island Looks to Make a Larger Portion of Its EITC Refundable
After successfully advocating to make 5% of Rhode Island’s 25% EITC refundable last year, The Rhode Island Campaign to Eliminate Child Poverty is now working with the General Assembly to raise the percentage of the credit that is refundable to 25%. The pending legislation (H7952 and S2562) would make Rhode Island’s EITC approximately equal to a 5% refundable EITC. The new EITC would benefit 42,000 families and bring about $3.8 million to Rhode Island’s economy.
Go to: http://www.rilin.state.ri.us/Billtext/BillText04/SenateText04/S2562.pdf and http://www.rilin.state.ri.us/Billtext/BillText04/HouseText04/H7952.pdf
Indiana Works to Make State EITC Permanent
In 2002, the Indiana General Assembly restructured the state’s EITC and set it at 6% of the federal EITC. This was a major victory for the coalition of advocacy groups who had worked to improve the credit. However, at the same time as they restructured the credit, the General Assembly set it to expire on December 31, 2005. With this is in mind, a coalition spearheaded by the Indiana Coalition on Housing and Homelessness Issues worked with Representative John Day to propose legislation that would increase the credit to 10% and make it permanent. While similar legislation has been received favorably in the past, a combination of a large fiscal note, the election year, and walkouts in the Assembly meant that the EITC bill did not receive a hearing this year. However, the coalition feels it is in a strong position to continue to advocate for the EITC in the next session.
Go to: http://www.in.gov/legislative/bills/2004/IN/IN1023.1.html
EITC Legislation Proposed in Missouri
While the state fiscal situation continues to make enacting a state EITC a challenge, Missouri’s Rep. Vicky Riback Wilson has proposed a 5% EITC that would grow to 20% in the year 2010 and beyond. However, the Missouri Coalition for Budget and Policy Priorities does not think this legislation is likely to pass this year despite growing support for the credit.
Go to: http://www.house.state.mo.us/bills041/bills/hb1300.htm
New EITC Research Released at Major Policy Briefing in Springfield, Illinois
On February 3rd, the Annie E. Casey Foundation and the Chicago-based Center for Economic Progress held a major policy briefing and press conference at the state capitol in Springfield, Illinois to release a new report by the Brookings Institution on the EITC. The report, The State of Low-Wage Workers: How the EITC Benefits Urban and Rural Communities in the 50 states, challenges popular assumptions that credits like the EITC primarily benefit those living in inner cities. It shows that rural and suburban communities are often the major beneficiaries of tax credits designed for low-income, working families. The report also finds that between tax years 2000 and 2002, the economic downturn and longer-term employment trends likely contributed to the 8% increase in the number of families nationwide claiming the EITC.
To view the full report, go to: http://brookings.org/es/urban/publications/eitc/20040203_berube.htm
These articles detail the findings of the study, go to:
http://www.eitc.info/feb4_news.asp
Members of Congress Encouraged to Maximize Use of EITC in Their Districts
The Hatcher Group recently organized several Congressional staff briefings on how Members can support free or low-cost tax assistance campaigns in their districts and states. Nearly 60 House staffers attended two briefings, December 3rd and January 23rd, that were co-sponsored by Congressman Sherrod Brown's (D-OH) office. A similar briefing for Senate staffers was held on February 23rd. The Senate briefing was co-sponsored by Senator Daniel Akaka (D-HI) and Senator Peter Fitzgerald (R-IL), and nearly 30 staffers attended, representing 27 Senate offices. The series of briefings presented new research by the Brookings Institution showing the importance of the EITC to rural, suburban, and urban constituents. Participating in the sessions were Alan Berube of the Brookings Institution, John Wancheck of the Center on Budget and Policy Priorities, Nina Olson of the IRS, Deborah Cutler-Ortiz of the Children’s Defense Fund, and Ed Hatcher and Susan Gilbert of the Hatcher Group.
The Hatcher Group also organized a briefing on March 5th for staffers
from North and South Carolina's Senate and House offices to update them
on the EITC and free tax preparation assistance in their states. Presenting
at the meeting were: Lucy Gorham and Leslie Boney, EITC Carolinas; Miriam
Shark, Annie E. Casey Foundation; Alan Berube. Brookings Institution;
and Deborah Cutler-Ortiz, Children's Defense Fund.
To read the briefing book, go to: http://www.thehatchergroup.com/rec_projects/documents/Briefing Book.pdf
New Brochure Highlights Results of Tax Assistance Campaigns
The Annie E. Casey Foundation produced a new brochure detailing the results of the national campaign's first year (2002-2003). This brochure follows an earlier brochure, which visited three free tax preparation campaign sites in Boston, Louisville and rural North Carolina. Both reports illustrate the important work the national campaign is doing to help low-income families across the country.
To view the brochure from February 2004, go to: http://eitc.info/elements/EITC_Results.pdf
To read more about the campaigns, go to: http://www.thehatchergroup.com/rec_projects/documents/HGwebsite_eitc_rpt.pdf
IRS Consolidates EITC Work, Broadens Outreach
In late January, the IRS announced that it has consolidated all EITC management activities in a single EITC office to help coordinate EITC program administration and improve the accuracy of tax returns and the agency’s internal processing procedures. The agency also announced that it is broadening its EITC outreach in an effort to maximize EITC participation and minimize errors. The IRS is working with 14,000 volunteer sites, 180 community-based organizations, and coordinating with mayor’s offices nationwide to help identify low-income taxpayers who may qualify for the EITC and offer them low-cost tax preparation assistance.
Go to: http://www.irs.gov/newsroom/article/0,,id=119792,00.html
Department of the Treasury Produces
Electronic Toolkit for Tax Preparers
Tax preparers are an important link in helping taxpayers understand and
appropriately claim the EITC. To make it easier for the public to navigate
the complexity of EITC, the IRS created an electronic toolkit. It features
online resources and information to help determine eligibility for the
EITC, ensure full compliance with EITC rules and regulations, and also
file accurate claims on behalf of clients.
Go to: http://www.eitcfortaxpreparers.com/
IRS Website Provides Resources for Organizations that Work with EITC Taxpayers
The IRS has designed an electronic toolkit to provide resources for Stakeholder Partnerships, Education and Communication (SPEC) employees and partner organizations that work with taxpayers who may qualify for the EITC. The kit was developed for use in preparing for tax year 2003 and subsequent tax years. It includes five sections designed to provide an overview on EITC; information on specific audiences; downloadable tools that can be used by employees and partners; resource information; and statistical information relating to tax year 2002. The “EITC Statistics-at-a-Glance” section of the site allows the viewer to see state-by-state EITC statistics by rolling over each state on a map of the United States.
Go to: http://www.irs-eitc.info/SPEC/
The Center on Budget and Policy Priorities Releases New EITC Toolkit
The Center on Budget and Policy Priorities released its new EITC Outreach Campaign Kit in December. The kit, called Make Tax Time Pay!, provides everything an organization needs to help workers get the tax credits they have earned: easy-to-read fact sheets on both the earned income credit and the child tax credits; a full range of outreach strategy ideas that have been used successfully in local communities; posters, flyers, and envelope stuffers in English and Spanish; and the essential tax forms workers need to claim the credits.
Go to: http://www.cbpp.org/eic2004/index.html
National Women’s Law Center Targets Child Care Services Networks for EITC Outreach
In collaboration with eleven advocacy organizations, the National Women’s Law Center has launched a Tax Credits Outreach Campaign in seven states (California, Iowa, Louisiana, Nebraska, New Mexico, New York and Oregon) and the District of Columbia, to inform families about the tax benefits they are entitled to claim, with a special emphasis on reaching families through child care services networks.
Go to: http://www.nwlc.org/details.cfm?id=1742§ion=tax
Web-based, User-Friendly Application Helps Low-Wage Earners File for EITC
In 2002-2003, the Legal Aid Society of Orange County received a Technology Implementation Grant from the Legal Services Corporation and a grant from the Internal Revenue Service Low-Income Taxpayer Clinic Program to develop and implement I-CAN!, a web-based, user-friendly application to help low-wage earners complete and file their federal tax returns. The application is available for free on the web in English, Spanish, and Vietnamese and targets a fifth-grade reading level to maximize ease of use. It can also prepare state returns for California, Massachusetts, Maryland, and Oklahoma. Last year – in a pilot effort – ICAN! returned nearly $600,000 to low-wage workers, primarily in Southern California.
Go to: http://www.icanefile.org/programs/default.html
New EITC Legislation Proposed in the House and Senate
Several pieces of legislation regarding the EITC have been proposed in Congress. Senators Bingaman (D-NM) and Akaka (D-HI) have proposed a bill to assist low-income taxpayers in preparing and filing their tax returns and to protect taxpayers from unscrupulous refund anticipation loan providers. In the House, Congressman Hastings (D-FL) introduced a bill to direct the Commissioner of Internal Revenue to establish an earned income credit public awareness campaign to raise awareness and educate Americans about the earned income credit.
Go to: http://www.stateeitc.com
| Newsletter Editors | |
| Sarah Samson |
Phone: 301-656-0348 Fax: 301-656-0633 Email: sarah@thehatchergroup.com Web: http://www.thehatchergroup.com/ |