Published November 1, 2005 | November 2005 issue
With the end of the year in sight and another tax time approaching, a coalition led by Consumer Credit Counseling Service (CCCS) of Montana will soon gear up for its second season of providing free tax preparation assistance to residents of the state's North Central region.
The effort is part of the Internal Revenue Service's (IRS) Volunteer Income Tax Assistance (VITA) program, which was created to raise awareness of the Earned Income Tax Credit, or EITC. The EITC is an integral part of helping low-income individuals build personal assets. (For more information on the EITC, see the sidebar below.) The credit is especially important in North Central Montana, where 25,000 of the area's 150,000 residents live on incomes that fall below the federal poverty line.
During its debut tax season in 2005, the VITA initiative helped 205 low-income wage earners in rural North Central Montana claim a total of $358,250 in tax refunds. In the process, the free service saved those individuals an estimated total of $20,500 in tax preparation fees.
The initiative operated five sites located in the cities of Havre and Great Falls and on the Blackfeet, Rocky Boy and Fort Belknap Indian Reservations. The sites were staffed by students, retirees and other community members who received IRS-certified tax preparation training at local tribal colleges. Coordinators plan to expand to 13 sites in 2006 and will operate mobile units that can travel to remote rural areas.
The support of many individuals and organizations helped ensure the success of the program in 2005.
"We wish to thank all of the coalition partners who lent their support," says Tom Jacobson, Executive Director of CCCS of Montana. "Through the collaborative efforts of our partners, we'll be able to expand this program across the state and reach more Montanans year after year."
The project is primarily funded by the W.K. Kellogg Foundation. Seed money was provided by Opportunity Link, a program of the Northwest Area Foundation. Other funders include the State of Montana, North Central Montana Community Ventures Coalition, and the Montana Community Foundation. Coalition partners include U.S. Senator Max Baucus; Montana Governor Brian Schweitzer; the Blackfeet, Fort Belknap and Chippewa-Cree Rocky Boy Indian Nations; IRS; United Way of Cascade County; Montana Credit Union Network; Montana Association of County Officials; Native American Bank; First Interstate Bank; Weed and Seed Program of Great Falls; Montana HomeOwnership Network; National Rural Funders Collaborative; Cascade County Office of Public Assistance; and Center on Budget and Policy Priorities.
Shannon Augare is the director of community asset development for CCCS of Montana, a 501(c)(3) nonprofit corporation that has provided financial counseling and education to Montanans for nearly 40 years. For more information on the North Central Montana VITA project, contact him at (877) 275-2227.
EITCs in brief
Congress established the Earned Income Tax Credit (EITC) in 1975 to assist low-income working individuals and families. The EITC is a refundablecredit, meaning if a worker's income tax liability is less than the amount of the credit for which he or she qualifies, the worker receives the remaining amount of the credit as a refund.
To claim the EITC, workers must meet certain income qualifications and file tax returns, even if they do not owe any tax or their incomes are so low that they are not otherwise required to file. The size of the credit ranges from several hundred dollars to more than $4,000, depending on the amount of earned income and the number of qualifying children in the household.
Over its 30-year history, the EITC has developed into the nation's largest antipoverty program. In 2004, an estimated 22 million people received a total of $38 billion through the EITC, an amount approximately equal to the benefits under the federal Temporary Assistance for Needy Families and Food Stamps programs combined. However, the Internal Revenue Service (IRS) estimates that 25 percent of people who qualify do not file for the credit, resulting in billions of dollars in unclaimed tax relief each year. To spread the word about the EITC, the IRS works with community coalitions, financial institutions and other partners in sponsoring Volunteer Income Tax Assistance, or VITA, sites throughout the country.
Information on the EITC was provided by Judith LaBrosse, a senior tax specialist with the IRS. She can be reached at (651) 726-1583. For more information on the VITA site program, contact the IRS at (800) 829-1040.