Every tax season, unsuspecting low income residents fall victim to tax preparation firms that use hidden charges and recommend unnecessary and expensive tax refund products like Refund Anticipation Loans (RALS) or Refund Anticipation Checks (RACS) to make a profit at the expense of citizens’ deserved tax refunds.

Refund anticipation loans—sometimes called “rapid refunds”–are short-term bank loans secured by tax refunds expected by the borrowers, mostly low- or moderate-income taxpayers. The customer usually gets a check within days, while the bank later collects the actual refund from the account of the customer, who is responsible for any remaining balance, plus fees and substantial interest. (San Francisco Chronicle 2014) While the government has recently begun to prohibit Refund Anticipation Loans, they have been replaced by the equally costly Refund Anticipation Checks (RACS) which operate on the same premise—quick and easy cash to the filer.

Filers pay a fee that ranges from $35-$50, in addition to a percentage of their refund. In most cases, the average taxpayer will end up spending around 10% of their refund in order to receive their money earlier in the form of a refund anticipation loan. For most low income folks, this equals approximately $200.

In many cases, victims of these predatory practices are taxpayers eligible for the Earned-Income Tax Credit (EITC), a critical economic support that allows hardworking low-income families to keep more of what they earn. Nearly 70 percent of these families use a commercial tax preparer to claim the EITC. (City of Chicago, 2013) Electronic tax filing and preparation services cluster in neighborhoods where large numbers of families claim the EITC. High-EITC zip codes are home to 50 percent more electronic tax preparation services per filer than low-EITC zip codes.

The national average fee charged for 2014 returns will be $273, according to a survey by the National Society of Accountants. For those individuals who earn minimum wage, that can represent nearly 5 days of work. This does not include the cost for the “rapid refund” which is usually about $200. Low income filers can easily pay nearly $500. Our goal is to keep that money in the pockets of low income Niagara County residents.

In this vein, Consumer Credit Counseling Service (CCCS) launched the Niagara County Financial Literacy Coalition (NCFLC) in 2013 to provide free opportunities for financial education and awareness. It is particularly designed to help low income Niagara County residents, with access to volunteer income tax assistance a central focus. Residents can file their taxes for free, and special attention will be paid to ensure that the EITC is received.

Individuals can get their federal and state taxes filed for free at two Niagara County locations:

Orleans Niagara BOCES 140 Genesee Street, Lockport

Family and Children Services Center 1522 Main Street, Niagara Falls

Appointments for this service must be scheduled by calling 712-2060. Household income must be at or below $53,000. Appointments are available in February and March on Tuesdays from 1:30-4:30 pm and Wednesdays from 1:30-4:30 pm.

“Proliferating tax preparation services and products in low-income neighborhoods are diverting significant EITC dollars away from working families,” said Paul Atkinson, President & CEO of Consumer Credit Counseling Services. “It has always been our goal that the Niagara County Financial Literacy Coalition advocate for residents, helping them receive all of the money that they are entitled to—and then showing them how to create a realistic budget that helps work toward asset building. This is where it all starts—and we are here for folks to help every step of the way.”

CCCS and the Coalition will encourage filers to attend free one-on-one financial coaching sessions to help set a budget and spend their returns wisely. The Niagara County community is also urged to participate in other services provided by the Coalition, including Financial Literacy Classes such as Dollars & Sense; Credit Counts and Money in Motion.

As another option to file 2014 taxes, individuals can go directly to the Consumer Credit Counseling website and file online.  To file, click on “myfreetaxes” on the CCCS website–www.consumercreditbuffalo.org. Software is available 24 hours a day, 7 days a week. Online help is also available, at specific times. See the website for more information. “Myfreetaxes” is a Facilitated Self Assistance filing service sponsored by the IRS.

The Coalition is a collaborative effort among many community partners. The following agencies participate in the NCFLC:

• United Way of Greater Niagara
• Family & Children’s Service of Niagara
• Niagara County Department of Social Services
• The American Red Cross
• Literacy New York Buffalo-Niagara
• NiaCap (Niagara Community Action Program)
• YWCA of Niagara
• YMCA of Lockport
• Niagara Falls Housing Authority
• Lockport Housing Authority
• Rivershore
• City of Niagara Falls Department of Community Development
• Niagara Worksource One
• Niagara University
• NCCC Single Moms Program
• NYS Tax Department
• Heart, Love and Soul
• Highland Community Revitalization Services
• Niagara Falls School District
• The Dale Association
• Niagara Orleans BOCES
• Lockport Main Street Inc.
• Bank of America
• First Niagara Bank
• Wellness Connection Center

For more information on the Coalition and CCCS —or to get involved—contact Noelle Carter at 716-771-3255 or noelle.carter@cccsbuffalo.org

About CCCS

Consumer Credit Counseling Service (CCCS) is a non-profit, full-service credit counseling agency, providing confidential financial guidance, financial education, counseling and credit repayment assistance to consumers since 1965.  CCCS of Buffalo helps consumers trim expenses, develop a spending plan and repay debts.  Counseling is available at our Main Office in West Seneca, in one of our Satellite Offices, by telephone and via Internet.  Visit www.consumercreditbuffalo.org for more information.