Press Release

Legislation Provides Welcome Relief to Low-Income Taxpayers

Washington, DC, April 17, 2008 – Bread for the World congratulates the U.S. House of Representatives for passing the Taxpayer Assistance and Simplification Act (H.R. 5719), legislation that seeks to modernize the Internal Revenue Service (IRS) functions and provide important protections to taxpayers.

The bill allows IRS employees to refer low-income taxpayers to tax professionals who participate in Volunteer Income Tax Assistance (VITA) programs, and authorizes a funding boost for VITA sites across the U.S. to $10 million, a $2 million increase.  House Ways and Means Chairman Charles Rangel (D-NY), who introduced the bill along with Oversight Subcommittee Chairman John Lewis (D-GA), says the bill "makes our Federal tax system fairer."  

"Chairman Rangel has always been a great champion of low-income families, and we're behind him 100 percent in his efforts to push this important piece of legislation through the halls of Congress and get it signed into law," says David Beckmann, President, Bread for the World.  

He adds that in addition to saving low-income Americans an average of $300 each -- the typical cost of using a commercial tax preparer like H&R Block or Jackson Hewitt -- going to a VITA site provides an important safeguard against predatory refund anticipation loans offered by commercial preparers. "They often encourage low-income filers to purchase short-term, high-interest loans, with annualized interest rates of up to 700 percent." 

Todd Post, a senior editor at Bread for the World and author of "Asset Building at Tax Time: Scaling Up Volunteer Income Tax Assistance," says that paying for tax prep is an unnecessary expense for the working poor and other low-income Americans.  "VITA sites are certified by the Internal Revenue Service and offer comparable services, including rapid refunds, for free," he said.  "Another important thing VITA sites do is provide financial education, something people can't expect from a commercial tax preparer, certainly not for free."

The report, available online at www.bread.org, explores this sorely underused, but effective money-saving alternative and shows the impact of scaling up VITA programs. Nationwide, these programs run by non-profits serve just one percent of low-income filers. VITA sites saved low-income taxpayers $62.7 million in 2004. Post says this is only a fraction of the amount of money VITA sites could help low-income taxpayers hold onto.  "Right now low-income taxpayers pay nearly $3 billion in fees to commercial tax preparers" says Post. "If VITA programs could be scaled up to reach five percent of EITC filers, it would mean hundreds of millions of dollars in savings for the families that stand to benefit. That is the point of what H.R. 5719 is trying to achieve."

Other key benefits of H.R. 5719 include requiring that notifications of potential eligibility be sent to tax filers who, based on the financial information they submitted on their tax return, should qualify for the EITC but did not claim it. 

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Bread for the World is a collective Christian voice urging our nation's decision makers to end hunger at home and abroad. By changing policies, programs, and conditions that allow hunger and poverty to persist, we provide help and opportunity far beyond the communities where we live. www.bread.org