KENTUCKY YOUTH ADVOCATES - Press Release

For Immediate Release

December 17, 2008

Contact:

Mary O'Doherty

Kentucky Domestic Violence Association

502 592-7856

Free tax-preparation sites help working families save

tax preparation fees, avoid predatory high-interest loans      

Economic impact on local communities was $14.7 million

 with nearly twice as many families served in 2008

FRANKFORT (Ky.) -- Free tax-preparation sites operated by the Kentucky Asset Success Initiative (KASI) helped families claim tax refunds of $6.9 million in 2008, generating $14.7 million in economic activity in their communities.

The free services provided by KASI volunteer tax preparers saved families $1.4 million in tax preparation fees and predatory refund-anticipation loans -- an average of $205 per taxpayer. IRS data show a third of tax filers who claim the federal Earned Income Tax Credit (EITC) typically obtain such loans, which have annualized interest rates that generally exceed 200 percent.

“Nearly 7,000 families were served by our sites this year, almost double the number we served in 2007,” said Mary O'Doherty, who directs the project for the Kentucky Domestic Violence Association. “As a result, the economic impact our sites had on their local communities also doubled.”

The primary goal of the KASI free tax-preparation sites is to ensure working families who are eligible claim the EITC. The IRS estimates that as many as 20 percent of Kentucky families who qualify for the EITC do not claim it.  In 2008 the initiative sponsored 58 free tax sites in eastern, central and western Kentucky.

The EITC is the federal government’s largest program benefiting working families. An important goal of KASI is to ensure families who are eligible for the EITC claim it. More than 6,800 families took advantage of the free tax-preparation services in 2008 and more than 2,203 of those participating families claimed the EITC.

In 2008 families who claimed the EITC received a maximum credit of $4,716 for a family with two or more children. KASI is comprised of four regional coalitions whose volunteer tax preparers are from dozens of community-based organizations.      

“As tax season 2009 approaches we want to build on our success and reach even more families,” says O’Doherty. “With the current economic downturn, this initiative is more important than ever.”                                       

Research has shown that most taxpayers who claim the EITC spend the money in their local communities -- on repairs on to their vehicles or homes or big-ticket purchases like a new refrigerator. This spending creates a multiplier effect -- every dollar the taxpayer spends is actually worth more. The KASI sites created an additional 36 to 79 cents in economic activity, depending on the location.

Using the multiplier effect, the tax refunds spurred more than $14.7 million for the recipients' communities, according to calculations by UK economist Dr. Alison Davis.    

Kentucky Asset Success Initiative (KASI) is a broad-based collaborative effort dedicated to promoting economic self-sufficiency for low-income families. The Kentucky Domestic Violence Association oversees KASI with partner support from LexLinc, Kentucky Youth Advocates and Community Action Kentucky.