Stephen Black discusses the SaveFirst initiative and civic responsibility on NPR’s All Things Considered.
Stephen Black speaks with MSNBC’s Melissa Harris-Perry about how tax preparers target low-income people.
On April 7, 2014, The New York Times published, “Tax Preparers Targeting Poor With High Fees,” featuring SaveFirst.
Click here to register for SaveFirst tax training sessions. All trainings … More
SaveFirst trains college, graduate, and law students to provide free tax preparation services and opportunities for savings and economic improvement to low-income, working families—especially targeting those eligible for an Earned Income Tax Credit refund.
The seventh year of SaveFirst (2013) saw tremendous success in terms of student involvement and community members served. Over 425 trained students from more than sixteen campuses prepared tax returns for more than 6,200 families at sixteen sites statewide. In just six weeks, our statewide campus collaboration helped these working families secure $11.7 million in tax refunds, saving them $1.9 million in commercial tax preparation fees.
SaveFirst targets those who qualify for the Earned Income Tax Credit, the federal government’s largest anti-poverty program supporting low- to moderate-income working individuals and families. (Hear a national story on the value and legacy of the EITC.)
SaveFirst Community Partners
In just seven years, SaveFirst has grown into the largest and most successful volunteer tax preparation program in the state! SaveFirst is a collaborative effort among Impact Alabama, fifteen Alabama universities and colleges, cities across Alabama, the Internal Revenue Service, and hundreds of businesses, nonprofits, and community organizations throughout the state of Alabama. We are grateful to all of our community partners for the success of this effort. We are particularly excited about our major sponsor relationships with Regions Bank and FOX 6, both of which have been critical to the success of our fifth season.
SaveFirst is an AmeriCorps program and is funded, in part, through Serve Alabama, the Governor’s Office of Faith-Based and Volunteer Service. We love our State Commission!
Free Tax Preparation
Students attend a six-hour tax training session in early January during which they learn tax law concepts such as determining filing status and dependency exemptions, how to report sources of income, and figuring the eligibility of tax credits. Students also become proficient in using a web-based tax software tool during the training. Following the training, all students must pass an IRS certification test. Once certified, students prepare taxes at community-based sites across the state beginning in mid-January.
Tax Site Locations(including links to maps)
Apply for the 2014-15 SaveFirst Campus Fellowship here.
Free Online Tax Filing
Taxpayers who are unable to visit one of our tax sites and make less than $57,000 can file their taxes for free online at the following website:
Poverty Course Development
Students enrolled in poverty service-learning courses discuss and reflect on issues such as perceptions and misperceptions of those living in poverty and current policies affecting working families. Through their service at SaveFirst sites located directly in communities of need, students then gain firsthand experience and the ability to think more critically about those issues introduced in the classroom.
The vast majority of working families live paycheck to paycheck with little or no savings to shield against unforeseen emergencies or to plan for future needs. Savings plays a critical role in insulating families from financial shocks. At a time when jobs have been disappearing and workers’ hours are being cut, families’ needs for savings are even more pronounced. SaveNow WinLater tackles this problem by focusing on two critical elements: utilizing the best possible savings product and creating the strongest possible incentive to save.
For every $50 eligible taxpayers invest in a federal savings bond, they earn a chance to win a grand prize jackpot as well as two smaller monthly prizes awarded in February and March. Families making less than $50,000/year with one or more children in the home or $25,000/year without children are eligible to participate.
This innovative initiative attracts taxpayers and positively impact their saving levels. Taxpayers can enter without risking any principal or interest. Moreover, they can participate with the knowledge that they are building important financial assets for themselves and their families.
A major effort that we launched during our third year was to organize all students participating in SaveFirst to work together to encourage the Alabama State Legislature to pass the Alabama Taxpayer Protection and Assistance Act to reform the commercial tax preparation industry. Basing our own model legislation upon statutes that states from around the country have enacted, this legislation would have provided oversight over the industry by requiring all commercial tax preparers to pass a minimum proficiency exam, obtain an annual license, and fulfill continuing education requirements. Utilizing hundreds of college students not only brought more attention to this important effort, it also inspired the students themselves to believe in the efficacy of collective action and to continue to work for structural changes to solve societal problems.
Update: The Alabama Taxpayer Protection & Assistance Act passed the Alabama Senate unanimously in late February 2009. Unfortunately, it stalled in the House and although it came up for debate on the House Floor at the end of the session, it did not come up for a vote. During the summer of 2009, the IRS Commissioner announced his intention to seek public opinion on this issue and to develop recommendations on how to reform the industry at a national level. A staff member from Impact Alabama presented our findings to the IRS Commissioner in Washington, DC, in September 2009. Most recently, the IRS announced sweeping new regulations to require commercial tax preparers to pass a competency exam, obtain a license, and complete continuing education requirements.
The Need for SaveFirst
Many low-income households are eligible for the EIC and other tax credits, but are unaware of their existence and thus do not apply for the annual refunds. The IRS estimates that 15% or more of EIC refunds are unclaimed by low-income families, which amounts to approximately $2.7 billion each year (The 2004 Just Money Project). Moreover, many who do not have the resources or knowledge to file their own taxes instead rely on costly commercial tax preparers. Additionally, many consumers are convinced to take out a Refund Anticipation Loan (RAL) – a predatory one-to-two week loan secured by and repaid directly from the proceeds of a consumer’s tax refund, offered at exorbitantly high interest rates, ranging from about 50% to over 800% APR.
In Alabama, more than 500,000 families annually claim an estimated $1 billion through the federal EIC. However, with more than 75% of EIC recipients in Alabama paying a commercial preparer to complete their taxes, Alabama families lose more than $78 million annually to tax preparation and refund anticipation loan costs – a figure which places us at 48th in the nation. That extra $78 million could have made a tremendous contribution to helping lower-income families secure health insurance, pay down debts or put food on the table.
Goals for the 2014 Tax Season
SaveFirst is growing faster and faster each year. In 2014, we anticipate increasing the number of families served by 10% – serving more than 6,800 families.