An ever growing populace, a tax code that changes daily, and a tight operating budget ($1.5B smaller than the amount requested by the president) will impact the ability of the IRS to provide effective taxpayer assistance in 2012, according a recent report to Congress.
The institution has already suffered performance setbacks in many metrics, advises Nina E. Olson, the U.S. Taxpayer Advocate presenting the report. From 2004 to 2011, answered calls from consumers seeking assistance dropped by 17%. Unresolved correspondence for tax adjustment 45 days and older increased 309% during that time.
In the end, the consumer will be affected most by these lapses, with delayed refunds and a decrease in access to free or cost-effective assistance. But among credit union members, this growing national problem has a local solution.
Assistance In Person And Online
Multiple credit unions host open volunteer income tax assistance (VITA) programs at their branches and emphasize assisting low-income or other special needs groups in the community.
Among more tech savvy or financial stable segments, online filling is a frequently preferred method and credit unions are capable of providing additional resources or incentives to assist with the process. For example, Tinker Federal Credit Union ($2.6B, Tinker Air Force Base, OK) offers its members a discount of up to $20 on a TurboTax filling if they use the link from the credit union’s website.
One hundred credit unions in the state of Michigan have partnered through a league to promote a free tax preparation service called Just File It! The service is multilingual and features support via an online chat function.
“We offered it last year as a test to see if it would connect with our members and it did,” says Swami Seetharaman, senior vice president and chief marketing officer for Credit Union One ($732M, Ferndale, MI). “It fills the needs for those who can’t afford the fees for paid tax filing services.”
In 2011, 361 of the credit union’s members used the service, receiving $481,809 in federal refunds and $92,811 from the state. This year, the credit union expects 500-700 members to file using the service.
There is very little cost to the credit union aside from marketing costs, says Seetharaman.
“In 2011, we spent about 15 hours developing the content for website and email. This year, we plan to reuse most of it. We will also use Facebook to promote this service this year.”
Refund Anticipation Loans And Other Financing
Credit unions have long been active in offering low-cost refund anticipation loans (RALs) to help consumers cover the gap until their check arrives.
Nationwide, 150 credit unions offered RALs at year-end 2011, compared to 129 credit unions the year before, according to Callahan & Associates Peer-to-Peer data. With possible delays in processing and returns (as much as six months for refunds held for suspicion of fraud), this could be a critical year for such services.
Federal and state governments are also showing more lenience with past due taxes, making it a key time for consumers to get square with the government.
This year, North Carolina is offering a 35% waiver in late payment or penalty fees and State Employees Credit Union ($23B, Raleigh, NC) is offering a 5% APR loan to help people take advantage of the opportunity.
“This program will directly help our taxpaying citizens who have faced financial challenges during this economic downturn,” said Linda Millsaps, chief operating officer in a release. “With partners like SECU supporting this effort, more people will be able to resolve their tax obligations and have a fresh start in 2012.”