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CU System
Filene studies CUs tax-time help for low-income staff
MADISON, Wis. (3/24/09)--For most people--especially for low-income consumers--income tax filing is the single biggest financial event of the year, and credit unions may be in a position to help, according to a new Filene Research Institute study. The study, The Economics of Serving Low-Income Employees at Tax Time: Implications for Credit Unions, authored by John Hoffmire, explores a partnership between Progress Through Business, a nonprofit organization focused on poverty alleviation issues, and H&R Block to offer tax preparation to low-income employees of Staples, Inc. The report shows how tax preparation services, corporations and nonprofit organizations can work together in the process. The study was conducted with funding from the National Credit Union Foundation and its signature program, REAL Solutions. More than 400 Staples employees took advantage of tax preparation and benefits enrollment services. These employees received higher tax credits or refunds and other tax advantages than they would have received without the service. The combination of tax preparation and public and private benefits enrollment also increased employee participation in employer-sponsored plans such as employee stock purchase plans, 401(k) retirement plans and tuition reimbursement programs. Enrollment in public benefits also increased, with higher claims for Earned Income Tax Credit, child care credits, renters’ credits, education credits, and other benefits aimed at low-income taxpayers. The advantage for Staples was a reduction in employee turnover. After one full year of tracking, those who participated in the program during the 2007 tax season showed a 32% improvement in retention over those who did not participate. “For each employee who participated in this program at a cost of $75, the company saved $480,” the study said. “The Tax Break program is more than a modest tweak in mainstream Volunteer Income Tax Assistance programs,” said George Hofheimer, Filene chief research officer. “This study is about providing tax preparation and public/private benefits enrollment to low- and modest-income employee groups for a fee,” he added. “Previous work by the Filene Research Institute confirmed the efficacy of at-work financial service programs, and this report suggests that replicating the Staples program at credit unions could have dramatic implications.”
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