By Cosby Woodruff
Jan. 19, 2010
Impact Alabama wants to help low-income tax payers see more of their tax refunds. A simple commercial tax preparation can cost more than $200. If the taxpayer wants an immediate refund, that cost can climb even more. And that is if whoever is preparing your taxes is on the up-and-up.
Impact Alabama kicked off its 2010 filing season services Monday, and is hoping to increase the number of people that it helps each year.
Stephen Black, the group’s founder, said the annual free tax clinics help families avoid paying excessive fees just to get their own money back from the government.
Black said the tax volunteers are able to handle many more returns than they do each year.
The service is free to families with children and incomes of no more than $49,000. Individuals making less than $20,000 also are eligible.
Students from colleges across the state take training courses and volunteer to fill out the returns.
Other students who are more experienced act as supervisors, and finally staff members make sure everything is correct.
Those volunteers have training on every kind of return, Black said. That includes returns for first-time homebuyers and other complex returns.
Most returns will be eligible for e-filing, which also is free, Black said. When a return is filed electronically, the taxpayer can expect a refund in a little more than a week. That reduces the need for rapid refunds and similar products, he said.
A rapid refund actually is a loan with the tax refund serving as the collateral. The loans typically are for no more than two weeks, but still are costly. Black said the annual interest rate on such loans approaches 800 percent.
“It is one of the worst aspects of this industry,” he said of the loans.
Workers who qualify for the Earned Income Tax Credit are a favorite target for these rapid refund programs, Black said. About 69 percent of people who can claim the credit, paid a professional tax service to do their taxes last year, and many of these were funneled into rapid refund programs, according to ImpactAlabama.
Black is hoping to steer as many of those taxpayers as possible to the free services inMontgomeryand in more than a dozen other cities inAlabama.
