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Philadelphia, PA, January 17, 2007 – The Campaign for Working Families went undercover to calculate what they called “the greed of commercial tax preparers,” with the results announced today at the kickoff of the Campaign’s fifth tax season and the opening of 17 free tax preparation/e-filing sites in neighborhoods throughout Philadelphia. According to Campaign executive director Jean Hunt, the nation’s largest commercial tax preparers are targeting low-wage consumers earlier-than-ever in the tax season, with costly and risky loan products marketed to those who qualify for the federal Earned Income Tax Credit (EITC) and are therefore likely to receive large tax refunds. With new names like “instant money advance” and “money now”, these loans use pay stubs, not W-2’s, to estimate tax refunds, and then determine loan sizes based on that guess. Consumers pay excessive fees for the loans and are liable for repayment without the benefit of knowing the real amount of their IRS refund. At today’s announcement, Community Legal Services attorney Kerry Smith described the outcome of visits by Campaign testers to H&R Block and to Jackson Hewitt, the nation’s largest commercial tax preparers. She explained how testers went with their pay stubs to ask for loans, and that staff at both tax preparation companies used pay stubs to estimate the size of IRS refunds and, subsequently, the size of the loans that would be offered to the testers. Although testers stated that they did not want their taxes prepared, they were steered to tax preparation services at H&R Block and required to use tax prep services at Jackson Hewitt. As part of the loan process, H&R Block required a tester to apply for a dummy bank account that would allow for her IRS refund check to go directly to H&R Block. At Jackson Hewitt, the tester was told she would have to return, with her W-2, to take out a Refund Anticipation Loan or to open a dummy bank account; that would allow for her IRS refund check to go directly to Jackson Hewitt. Smith summarized by saying “our tests reveal three major problems: 1) insistence on loans that are more than a customer requests or needs; 2) offering of products that customers do not want or need; and 3) expensive and hidden fees.” According to Hunt, “commercial tax preparers are working aggressively, and earlier in the tax season, to pull dollars from the wallets of those most likely to get large tax refunds. That IRS check is excellent collateral and they know it.” Seventeen free tax-filing sites open in neighborhoods throughout Philadelphia this week, all managed by The Campaign for Working Families. The locations of the Campaign's free tax preparation sites and information on eligibility for the federal Earned Income Tax Credit (EITC) are available by calling the Campaign's 24-hour information line at 215-686-2599. Click here for more information. Philadelphia families and individuals earning less than $40,000 per year (2006) are eligible for the Campaign’s services. Taxes are prepared and e-filed by IRS-certified volunteers, who are trained to help customers get all of their tax credits and refunds, and to prepare “split refund” tax filings. EITC is a tax benefit for families and individuals who earned, in 2006, less than $38,348 (have children) or less than $14,120 (no children). EITC refunds can be up to $4,536 per year, based on family size and income. Over the past four years, Philadelphia's Campaign for Working Families has brought nearly $66 million directly into the homes of low-income working families, and saved these families an additional estimated $11.7 million in interest, fees and charges for tax preparation, check cashing and loans. # # # About the Campaign for Working Families (CWF): A partnership that operates free federal and state tax preparation/e-filing sites throughout Philadelphia. Connects individuals to the Earned Income Tax Credit (EITC), other tax credits and public benefits. Enables families to keep and grow their money through split refunds and additional asset building tools. For more information www.phillyfreetaxes.org or 215-686-2599. Managed by the Greater Philadelphia Urban Affairs Coalition (GPUAC), Campaign for Working Families partners are: Ceiba, City of Philadelphia: Free Library and Mayor's Office of Consumer Affairs, Community Legal Services, Consumer Credit Counseling Services of the Delaware Valley, District 1199c, Greater Philadelphia Coalition Against Hunger, Greater Philadelphia Urban Affairs Coalition, Internal Revenue Service, PathWays PA, Philadelphia Citizens for Children and Youth, Philadelphia Council AFL-CIO, Philadelphia County Assistance Office, Philadelphia Workforce Development Corporation, The Reinvestment Fund, Transitional Work Corporation, and United Way of Southeastern Pennsylvania.
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