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					Increasing Incomes and
Reducing the Rapid
Refund Rip-Off
Using Door-to-Door Outreach to Increase Participation in the
Earned Income Tax Credit and the Use of Free Tax Sites
Organizing Low-Income Communities to Reduce the Prevalence
and Cost of Refund Anticipation Loans

Presented to the
Marguerite Casey Foundation
Seattle, Washington

Wade Rathke, Chief Organizer, ACORN
New Orleans, Louisiana
Jordan Ash, Director, ACORN Financial Justice Center
St. Paul, MN

September 2004
The Earned Income Tax Credit (EITC) is the country’s single most effective poverty reduction
program. Almost 21 million families received more than 36 billion dollars in refunds through the
EITC last year. These EITC dollars had a significant impact on the lives and communities of the
nation’s lowest-paid working people, lifting more than 5 million of these families above the
federal poverty line. At the same time, however, billions of additional tax credit dollars which
families have earned are left unclaimed and billions more are lost to aggressive and deceptive
tax preparers.

       Billions in Unclaimed EITC Funds  Between 3.5 and 7 million families that were
       eligible for the credit in 2002 did not claim it, and, as a result, poor households and
       communities missed out on more than $6.5 billion in that year alone.

       Little Help Available Application for the tax credit requires filling out paperwork
       which remains a daunting task for many eligible families; only a third of EITC recipients
       prepare and file their own taxes. The IRS coordinates a program to provide free tax
       preparation and filing services for low-income families, the Volunteer Income Tax
       Assistance (VITA). However, this program serves less than 1% of all EITC recipients.
       Instead, two out of every three EITC recipients (67%) pay someone else to prepare and
       file their tax return, according to the IRS. At a cost of $100 to $150 for tax preparation,
       EITC recipients are spending over $14 billion for this service.

       High-Cost Rapid Refund Loans  Additional dollars are siphoned off by the most
       expensive and aggressive promoters of high-cost bank products such as Refund
       Anticipation Loans (RALs). RALs are usurious short-term loans secured by the
       recipient’s tax refund. With a RAL, low and moderate income taxpayers are charged
       extraordinarily high interest rates to get their own tax dollars back from the government
       just a week or so faster than they otherwise would. More than 7.6 million EITC
       recipients—37% of all EITC recipients nationally—got their refund through a RAL, paying
       a total of one billion dollars in RAL interest and fees.

       Emergence of New Abusive Refund Products – Even with the huge revenue
       from RALs and the large number of EITC recipients using RALs, tax preparers and the
       banks they work with have developed other products, such as Refund Anticipation
       Checks (RACs) and Assisted Direct Deposit, to siphon off even more EITC funds and to
       profit from even more EITC recipients who don’t buy a RAL.

      The following proposal builds on the project that ACORN conducted in 2004 with the
generous support of the Marguerite Casey Foundation, which was aimed at increasing the
number of eligible EITC recipients who claim their refund and reducing the reliance of low-
income families on expensive products such as RALs.

        In three pilot cities ACORN developed a replicable model of door-to-door outreach to
both identify families who earned but did not receive the EITC and to promote the availability of
free tax preparation services offered by ACORN.

                                          Page 2
        We developed materials and implemented a plan for doing intensive door-to-door
outreach. In addition to door-to-door outreach, ACORN made extensive use of other
neighborhood-based outreaches, including community meetings, schools and businesses, yard
signs, and earned media.

        The success of this project is evidenced by the large turnout at our VITA sites, which
was larger than those at other sites that did not use such methods, and particularly large for first
year sites. The ACORN sites demonstrated a high level of productivity. Together the three sites
prepared 3,481 tax returns, surpassing our goal by 50%, and filed for $3.9 million in EITC and
Child Tax Credit refunds. The ACORN VITA sites prepared taxes for more families than any of
the other sites in New Orleans or Miami, and more than any sites in San Antonio except those
run by the city or the IRS. A survey conducted at our Miami site revealed that one-third of the
individuals served there had not filed taxes at all in the previous year, demonstrating the
project’s success in reaching people who had not previously collected the EITC.

         Another project goal was to redirect the billion-plus dollars lost to expensive bank
products such as RALs. We organized lower-income families to target H&R Block, the largest
tax preparer in the country and the biggest seller of RALs, to demand that they reduce the costs
of RALs and make changes in the presentation and marketing of these products. The campaign
involved direct actions and demonstrations by our members at hundreds of different Block
offices during the peak of the tax refund season. Members distributed fliers to potential Block
customers and passers-by warning them about RALs and letting them know about the existence
of free tax sites, which were often just blocks away from Block. The campaign also generated a
significant amount of press coverage about Block as well as about the larger issue of RALs in
virtually every city where ACORN is.

         Our actions quickly persuaded H&R Block to come to the negotiating table. After several
months we reached an agreement—which is still confidential but will be made public this fall—in
which Block will get rid of the administrative fee they charged on RALs, totaling $192 million a
year. H & R Block also agreed to: advertise the fact that taxpayers can swiftly receive their
refunds without using RALs; provide disclosures which present cheaper, non-bank alternatives
first; provide disclosures about the true cost of RAL;, develop a plan to work with ACORN in the
future to reduce RAL costs and develop alternatives to them; and, lastly, support ACORN’s
outreach on EITC and other similar benefits.

         In addition to the direct success of reaching EITC recipients, providing free tax
preparation services, and winning reforms from H&R Block, the project also strengthened our
ability to continue this work in two important ways. First, our unprecedented success in running
the VITA sites gained us respect and recognition from the IRS and led to a national partnership
with the IRS’s Stakeholder Partnerships, Education, and Communication (SPEC) Department.
As part of this partnership, the IRS encouraged and assisted us in opening new VITA sites and
worked with us to select our priority cities. Second, the agreement with H&R Block includes $2
million over 3 years for ACORN to use in EITC outreach work in all 62 cities and larger scale
demonstration projects in Miami (continuing the Casey pilot), New York, and Dallas.

         As described in this proposal, we would like to continue and expand on the work begun
in the last grant year, putting to use the experience we have gained and lessons we have
learned. We will use the model developed in the three pilot cities and offer free tax preparation
services in 13 additional cities that the IRS has identified as having the greatest need for VITA
sites. We will also continue our RAL campaign by targeting Jackson Hewitt and Liberty Tax, the
second and third largest tax preparers in the country, respectively. We will also seek to

                                           Page 3
influence public policy on EITC and RALS, using the experience and knowledge we gain from
operating VITA sites and conducting campaigns against RAL providers.

Program Proposal
Our proposal to increase and preserve the federal dollars coming to low-income neighborhoods
through the EITC includes two major components, with activities in each part contributing to the
success of the whole. These two components are (1) direct EITC outreach and tax preparation;
and (2) reducing the costs and prevalence of RALs by winning reforms from RAL providers and
the banks they work with and affecting public policy on the city, state, and federal level.

Component A – Helping new households collect the EITC and
   increasing the use of VITA sites for free tax preparation

Section 1 Outreach and Education

       An outreach program to identify families who have not previously claimed the tax credit,
       and to get out the word about free tax preparation services and the cost of RALs

Research by the General Accounting Office (GAO) and IRS indicates that between 15%-25% of
households that have earned the EITC do not claim their credit in any given year. The
percentage of those who are eligible and yet who do not claim the credit is considerably higher
among certain groups, including immigrant families and the lowest-income earners.

We propose to use the door-to-door outreach method demonstrated in the three pilot project
cities in thirteen additional cities that the IRS has identified as having the greatest need for
additional VITA sites. We will use ACORN’s extensive existing community presence and
relationships to flood selected communities with information about free tax preparation services.
We will blanket our targeted neighborhoods to ensure that residents know the costs of various
commercial services and are aware of the availability of alternatives. In order to maximize our
work, we will concentrate our efforts in these neighborhoods in the weeks immediately before
and at the start of the tax season, when commercial preparers advertise heavily and when those
expecting refunds rush to file.

         After the success of our pilot project in New Orleans, San Antonio, and Miami, ACORN
met with Ron Smith, the IRS National Director of SPEC (Stakeholder Partnerships, Education,
and Communication) to discuss the expansion of our project. We asked Mr. Smith’s department
for a list of cities that had the greatest need for new sites, where we could have the greatest
impact. They identified 13 cities based on the number of EITC recipients as well as on whether
a city currently has no community-based free tax preparation programs (or where the free tax-
preparation program was very weak or not targeting the right population). These cities are
spread throughout the country and range from large (Dallas and Houston, TX) to small
(Bridgeport, CT and Glendale, AZ).

                                         Page 4

Note: Data below is from tax year 2002, the most recent available in this form.

City                     Total EITC                 EITC Returns VITA        % Vita Receiving
                         Recipients                 Prepared                 EITC
Bridgeport, CT           14,488                     16                       0.11%
Brownsville, TX          31,025                     92                       0.30%
Dallas, TX               121,173                    413                      0.34%
Denver, CO               58,568                     1,734                    2.96%
Fresno, CA               50,644                     545                      1.08%
Glendale, AZ             18,254                     231                      1.27%
Houston, TX              266,679                    1,688                    0.63%
Newark NJ                35,378                     20                       0.06%
Orlando, FL              82,560                     47                       0.06%
Pittsburgh, PA           40,478                     744                      1.83%
Richmond, VA             40,827                     0                        0.00%
Sacramento, CA           53,266                     243                      0.46%
St. Louis, MO            84,691                     633                      0.75%

These cities also have large percentages of EITC recipients who pay tax preparers and who
receive their refund through a RAL.

City                              % EITC Recipients who paid         % EITC Recipients who
                                  a tax preparer                     bought a RAL
Bridgeport, CT                    67%                                40%
Brownsville, TX                   81%                                46%
Dallas, TX                        72%                                51%
Denver, CO                        62%                                30%
Fresno, CA                        62%                                31%
Glendale, AZ                      65%                                34%
Houston, TX                       71%                                46%
Newark NJ                         73%                                49%
Orlando, FL                       68%                                42%
Pittsburgh, PA                    59%                                33%
Richmond, VA                      63%                                51%
Sacramento, CA                    65%                                32%
St. Louis, MO                     69%                                47%

         Within these thirteen cities, we will target specific communities using a variety of
decision criteria, including the percentages of families currently receiving the credit (available
from the IRS by zip code), and demographic data on the income, age, family status, and place
of origin and ethnicity of neighborhood residents. IRS data indicates that there are large
concentrations of EITC earners in each of our target cities who live in zip codes where at least
40% of residents collect the credit. We strongly believe that that these neighborhoods also
include at least the average portion (statistically 15%) of eligible non-filers; thus we believe we
can target communities where there is a dense population of eligible non-filers and apply our
intensive door-to-door approach to yield significant results.

                                           Page 5
         Existing research also indicates that immigrant families, and especially families in which
the head of household is of Hispanic origin, are considerably less likely to claim the earned
income tax credit. An IRS study of 1996 tax data, for example, found that fully 24% of those
eligible for the credit who did not claim it were from such families, and that these families were
responsible for an even larger portion (31%) of the total unclaimed dollars (because they were
more likely than other non-filers to have children, and more likely to have more children, making
the amounts owed larger). An Urban Institute study subsequently found that two-thirds of
Hispanic parents were unaware of the credit. As a result, we will focus particular—although not
exclusive—attention on neighborhoods with large immigrant populations.

        In each of these targeted communities we will also identify families who have either not
collected the tax credit for any of the past three years or not collected the child tax credit for the
last two years. After identifying these families we will contact them about the availability of our
VITA sites for help in preparing their applications.

         While the primary focus of this work will be on helping families who earned but did not
collect the EITC, we will also take advantage of the opportunity to increase the use of other
available tax credits and refunds. Estimates are that 20% or more of households who collected
the EITC were also eligible for the child tax credit and yet did not collect it. Our organizing team
will make families aware of this credit, determine past eligibility, and help families process
claims. In other cases, families have not collected refunds they are due because they do not
have a tax I.D. number; this is particularly true among non-citizens. We will spread awareness
of the need for a tax I.D. number, and assist them in applying for one.


         During the crucial period immediately before and during the tax season, when marketing
by high cost preparers is at its peak and when households counting on refunds rush to file, we
will make sure that our targeted neighborhoods are saturated with messages about the EITC,
the high costs of RALs, and the availability of free tax preparation. The main part of our
outreach will be going door-to-door to speak directly with those we are trying to reach. The
families we contact will also be enlisted in the effort to communicate to others through their
network of connections. They will do presentations and distribute materials at community
meetings, events, and gathering places, and they will help organize community leaders and
residents to communicate with their neighbors about these issues. Outreach work will also
include telephone contact with ACORN membership, churches, and unions in each of these
cities. Project managers will solicit free media, such as radio public service announcements, to
support this effort. Along with outreach workers they will also organize neighborhood
institutions including schools, recreation centers, and area businesses to help get out the word
by distributing fliers and posting signs.

       This effort will also contribute to the campaign described below to win changes in
excessive RAL costs. Likewise, the campaign against RALs will also serve as a form of
outreach through the media coverage that it generates.

                                            Page 6

      Develop effective outreach materials – including fliers, leaflets, and phone and
       presentation scripts – with information on the EITC and the child tax credit, free tax prep
       services, and on the costs of commercial tax preparation and RALs.

      Project staff will engage in the following outreach activities:

           -    Door-knocking and leaflet dropping
           -    Calls, mailings, and visits to contacts developed during pre-tax season program
           -    Calls and mailings to ACORN members
           -    Flyer busy neighborhood sites such as major intersections and supermarkets
           -    Making presentations at ACORN meetings, and training ACORN members to
                make such presentations
           -    Making presentations at ACORN community events and institutions
           -    Distribution of materials through local institutions including schools, churches,
                and businesses and through the distribution networks of ACORN allies such as
                labor unions
           -    Arrange for free media such as radio public service announcements
           -    Working with community residents to flier their neighborhoods, and to speak at
                community events

In each city we will communicate with at least 10,000 people about the costs of RALs and
commercial tax preparation, and the availability of free tax preparation services.

Section 2 Providing free tax preparation services to lower income families

       The establishment and operation of 13 neighborhood-based VITA sites to provide free
       tax preparation and filing for low income families.

The outreach described above will focus on encouraging low-income families to use the free tax
preparation and filing services that ACORN will offer through VITA sites in the thirteen cities
identified by the IRS to need them the most. The vast majority of EITC recipients pay
commercial tax preparers, which not only reduces their tax refund by the cost of the tax
preparation, but also makes these families more likely to lose even more of their refund to RALs
or other unnecessary and overpriced bank products.


Unlike many other VITA sites, we will work to make sure that the sites in these thirteen cities
have regular and adequate hours and are available in the neighborhoods we are targeting. In
each city the EITC team will include one project manager who will oversee the entire project and
one site supervisor who will be in charge of actual tax preparation, staff management, and
direction of the local project. The site supervisors will identify a location which we can use for
evening and weekend hours, and hire and train tax preparation workers to work at each site.

Tasks, Tactics, and Activities

      We will hire a site supervisor in each city to oversee the project

                                           Page 7
      The site supervisor will:
          -    Arrange for tax preparation location
          -    Secure materials and training from IRS
          -    Hire and train tax preparation staff
          -    Recruit volunteers
          -    Staff the free tax preparation site

We will serve at least 250 people at each tax preparation site, at least half of whom will be EITC
recipients, making us the largest VITA site in almost all of these cities. This will increase the
total number of EITC returns prepared at VITA sites by 25% and represent huge increases in
VITA returns in particular cities.

City                     EITC Returns VITA         % Increase if
                         Prepared in 2002          ACORN VITA Site
                                                   Serves 125 EITC
Bridgeport, CT                               16                   781%
Brownsville, TX                              92                   136%
Dallas, TX                                  413                    30%
Denver, CO                                1,734                     7%
Fresno, CA                                  545                    23%
Glendale, AZ                                231                    54%
Houston, TX                               1,688                     7%
Newark NJ                                    20                   625%
Orlando, FL                                  47                   266%
Pittsburgh, PA                              744                    17%
Richmond, VA                                  0                     N/a
Sacramento, CA                              243                    51%
St. Louis, MO                               633                  20%%

Component B – Reducing the costs and abuses of Refund
    Anticipation Loans and other refund products

In addition to the dollars lost because families are unaware of the EITC or can’t get the
help they need to file a tax return, additional dollars are lost when low-income taxpayers
are aggressively and deceptively sold high cost bank products, including Refund
Anticipation Loans (RALs), Refund Anticipation Checks (RACs), and Assisted Direct
Deposit. Billions of dollars are siphoned off to produce high profits for tax preparation
firms and the banks they work with, rather than going to the low-income working families
the EITC is intended to help.

Engaging people in taking action on their own behalf, and in joining with their neighbors
to do so is a crucial part of all of ACORN’s work, and it will be a crucial part of this
program. As we find and help new EITC earners, get out the word about free tax
preparation, work for an end to abusive RAL’s, and fight for legislative changes, we will

                                          Page 8
be building an organization of EITC earners. In the future, new community leaders will
become part of expanding this work, and able to play the active role necessary to
defend the EITC and ultimately to work to expand it.

Section 1 Targeting Tax Preparers

       A campaign to change the prices and practices of the largest sellers of Refund
       Anticipation Loans.

In recent years a few large tax preparation firms, working with finance company lending
partners, have discovered a new profit center in making extremely high rate ―Refund
Anticipation Loans‖ (RALs) mostly to low and moderate-income taxpayers. Rather than simply
charging fees to prepare taxes, these firms aggressively push tax filers to take out high-rate
loans in order to receive their refunds within a day or two (instead of the 8-10 day wait for
electronic filers who asked for direct deposit). RALs typically have annual percentage rates of
between 97 and 2,000 percent. Tax filers may have no idea that they are actually taking a loan,
much less what its rates are! Many are unsure of the alternatives.

      These loans and related fees are consuming a massive portion of EITC dollars
intended to benefit the working poor. In 2002, 67 % of EITC earners paid for tax
preparation, up from 62% in 1997. In 1999, 37% of the households that received EITC
refunds got them through a RAL.

       RALs seem to exist solely as a product for, and fee generator from, low-income
households that are the main purchasers of this product. Of the 12.7 million RALs made
nationwide in 2002, 10.6 million, or 83%, were made to low-income households and 7.6
million, 60%, were made to EITC recipients.

        In addition, we will expand our campaign to address the sale of new price-gouging
products such as Refund Anticipation Checks (RACS) and Assisted Direct Deposit , which are
similarly aimed at reaping profits from low-income families and EITC recipients. With RACs,
companies like Jackson Hewitt charge households $65 or more to set up a temporary bank
account into which the IRS deposits the customer’s tax refund. The tax preparation company
then issues a check to the customer from this account, minus the tax preparation and RAC fees.
Assisted Direct Deposit (ADD) involves setting up a temporary bank account into which the IRS
deposits the customer’s tax refund. The tax preparation company then transfers the funds into
the customer’s own account, minus the tax preparation and ADD fees.

       Data from Jackson Hewitt suggests that the same number of customers receive RACs
as RALs. Jackson Hewitt employees have been caught on hidden camera steering clients to
use RACs, regardless of whether a customer had the money to pay for taxes up front and could
simply have received the refund through direct deposit.


       Free tax preparation providers serve less than 1% of the total population of EITC filers.
Even with significant expansion and outreach by VITA sites, commercial tax preparers—and
whatever products they are selling aggressively—will continue to dominate the market. The
only way to dramatically reduce the damage done by their abusive products is to confront the
problem directly and compel them to change. We will build on the victories won with H&R Block

                                         Page 9
and target Jackson Hewitt and Liberty Tax, the second and third largest tax preparers in the

         Our strategy is to mount a direct effort against Jackson Hewitt and Liberty Tax, which will
be designed to force them to the bargaining table to change their RAL loans and other products,
including by dramatically reducing costs and limiting the circumstances of sale and m arketing.
We will use a broad range of tactics to push them into reaching an agreement with ACORN to
limit their fees and change their marketing.

        Organizers will mobilize ACORN’s base of active community members, and identify and
work with new families who were sold RALs. These neighborhood residents will work together
with organizers and leaders to develop and implement a plan demanding changes in the loans.
They will also help both policy-makers and the general public to understand the details of
abusive costs and sales techniques.

        In order for Jackson Hewitt and Liberty Tax to feel sufficiently threatened and be willing
to change their pricing and policies we need to put pressure on the companies in a meaningful
portion of the places where they do business. Thus, we propose campaign activity in 71 cities
in which Jackson Hewitt and/or Liberty Tax has an office.

         Jackson Hewitt has a total of 1,054 offices in 69 cities where ACORN has an office.
These offices account for 22% of all of Jackson Hewitt’s offices nationwide. Liberty Tax has a
total of 410 offices in 60 metropolitan areas where ACORN has an office. These offices account
for 35% of all of Liberty Tax’s offices in the U.S. and 29% of all of their North American
locations. (See attached for list of Jackson Hewitt and Liberty Tax cities).

        This list includes our Norfolk, VA and Newark, NJ offices, which are near the
headquarters of both Jackson Hewitt and Liberty Tax, respectively. In this way, we will be able
to bring pressure to bear directly where the senior executives live and work.

       We believe that Jackson Hewitt will be even more vulnerable than Block was to the type
of campaign we can wage. Jackson Hewitt’s business is mainly aimed at families who will get a
refund and who the company terms ―early filers‖ – that is they file during the first part of the tax
season because they are eager to get their refunds. Jackson Hewitt’s customer base is
predominantly low-income – 73% of their customers have annual incomes below $30,000 a
year. Their offices are also often located in the same neighborhoods where we organize and
have neighborhood chapters. In addition, there are over Jackson Hewitt offices in over 1,000
Walmarts throughout the country.

        ACORN’s work in each of these cities is crucial to making sure we can exercise leverage
to win changes in pricing and policy. These potential changes include regulatory action, public
approbation, engaging secondary targets (such as major shareholders of Jackson Hewitt now
that they have been made public), and finding the most sympathetic legislative and regulatory
environments. The campaign coordinator will work with all of the cities involved in the
campaign, providing information, tools, and materials and helping to maximize the combined
effect of pressure in multiple sites.


   Our work to put pressure directly on the makers of usurious RAL loans will include:

                                          Page 10
   •   Direct action targeting local offices, along with corporate offices and officers

   •   Repeated media exposure to the outrageous costs of RALs and the deceptive
       techniques used to sell them

   •   Neighborhood-based “stop the tax sharks” activities including window and lawn signs
       and resident leafleting warning people about the costs of RALs and informing them
       about alternatives

   •   Participating in and encouraging private class-action lawsuits

   •   Shareholder activities, including introducing resolutions demanding changes in abusive
       practices, being present at shareholder meetings, and communicating with major
       shareholders about our concerns with RAL loans

Section 2 Follow the Money – the Banks That Make the Loans

       The development of a strategy to win changes in the prices and practices of banks that
       make RALs

We believe that this project will help us win changes in the pricing and practices of the three
largest tax preparers in the country, and that these changes will create incentives for competing
local players to provide better prices. However, the tax preparation market (and thus the RAL
market) is extremely fragmented. H&R Block, Jackson Hewitt, and Liberty Tax together account
for about 30% of all tax returns prepared commercially in the U.S. The remaining tax returns
are prepared by tens of thousands of smaller companies. In order to get at the root of the
problem, we need to go directly to the banks that make their refund loans available to all the tax


Although this is a long-term project, since these banks are not as vulnerable to our campaigns
as the tax preparers themselves are, we will continue to take steps to win changes at the three
largest RAL lenders -- HSBC (which bought Household), Santa Barbara Bank and Trust, and
Chase (which merged with Bank One). During the last project, we began conversations with
two of these lenders, which will continue through this project. We will also initiate conversations
with the third. Ultimately we hope to win changes in the pricing of RALs and have the banks
impose standards on the tax preparers they work with to ensure that unnecessary products are
not being sold to customers.


   Our work to win changes at these banks will include:

   •   Continuing negotiations with Household and Chase

   •   Initiating conversations with Santa Barbara Bank and Trust

   •   Research to better understand the actual costs and expenses of making RALs

                                          Page 11
   •   Development of a best practices proposal to present to both banks

Section 3 Winning Legislation that Benefits EITC recipients

       Working on the city, state, and federal level for legislation that protects consumers and
       benefits EITC recipients

        Participants in ACORN’s campaign will work to pass new legislation and regulation in
states and localities to control these abusive practices. In this way, we believe that we can win
broad policy and practice changes that save low-income consumers across the country
hundreds of millions—and even billions—of dollars, as we have been able to do with high-cost
mortgage loans. Participants in ACORN’s campaign will also work to support federal legislation
that addresses the problem of RALs and provides additional funding to VITA sites.


     Our legislative efforts will include developing legislation to curb the making and marketing of
these loans, finding sponsors for this legislation, and mounting campaigns for its passage. We
will engage in a full range of activities necessary to a major legislative effort, including meetings
with legislators, building and working with coalitions of supporters, having neighborhood
meetings and using field work to ensure that legislators hear from their constituents, as well as
conducting a media campaign. The activities described above which are designed to put direct
pressure on RAL sellers will also serve as opportunities to push for legislative change. In turn,
legislative forums, such as hearings and meetings with legislators, will provide additional
opportunities for organizing public pressure to demand a change in practices.

   Our plan will involve having affected families communicate with legislators, the media, their
communities and other state and local officials who have an interest in defending the credit.


   Our work to win legislation will include:

   •   Identifying at least three cities and two states in which to move legislation

   •   Finding suitable sponsors and co-sponsors for the legislation

   •   Testifying at hearings

   •   Organizing public education campaigns, media events, coalition-building, and meetings
       between legislators and their constituents to press for passage of the legislation.

   •   Monitoring federal legislation

   •   Arranging meetings between ACORN members and their Congressional representatives
       during ACORN’s Legislative Conference in DC

                                           Page 12
Section 4 Improving IRS Rules and Policies regarding EITC

       A plan to defend the tax credit against the current administration’s pre-certification plan,
       and change IRS policies which suppress EITC utilization.

In last year’s project, we were prepared to defend the Earned Income Tax Credit against a new
―pre-certification‖ plan, which would require EITC recipients to take burdensome extra steps in
order to claim the credit – a plan which threatened to deny the EITC to up to 5 million
households. The first trial phase of the plan had already begun, affecting 45,000 households,
and we set our sights on limiting future IRS activities.

        We imagined this would be a massive task, but the terrain began shifting in the early
months of the project, when we as well as others raised our objections to the program. A
number of our project goals in this area were met more easily than we had envisioned. For one,
the IRS agreed to limit the scope of the pilot and to ease some of the most burdensome
requirements (such as a requirement that filers had to provide marriage certificates, often for
marriages between two other people that occurred decades ago, and in the case of immigrants,
outside of the US). The IRS also agreed to conduct a serious evaluation that would address the
fact that so many eligible families would lose their benefits as well as a second year of a very
limited pilot before proceeding with the plan at all.


        While we continue to monitor potential threats to the EITC, we have shifted our
attention—and now will attempt to shift the public debate—to how the IRS could work more
efficiently to give the credit to families who are missing out on it, and to improve the speed with
which they process refunds.

        Currently, the IRS does an inadequate job in this area. We would like the IRS to
improve their ineffective system of contacting families who have filed their taxes and who
appear to be eligible for the tax credit, but did not claim it, and informing them of resources to
contact for assistance, such as VITA sites. We would also like the IRS to develop a system for
contacting low-income families who have not filed taxes at all, usually the lowest-wage earners,
to make them aware of their eligibility for the EITC. Finally, if the IRS could speed up the time it
takes to process tax returns and send out refunds, it would have a large impact on the RAL

        In this project year, we will attempt to leverage the media attention, grassroots
constituency, and credibility we have gained around the EITC issue to convince the IRS to make
meaningful changes in its practices. We will mobilize community members who have become
active in this campaign educate the general public, and to bring persuade both IRS staff and
public officials to enact reforms.


•      Communicating with ACORN members and EITC earners about these issues at
       neighborhood meetings and leadership trainings

•      Monitoring the progress of the evaluation and the design of the new program

                                          Page 13
•   Meeting with the IRS staff responsible for these issues

•   Meeting with members of Congress and local and state legislators to discuss how many
    eligible households are not getting EITC and the losses to their communities that result,
    and moving them to join us through joint meetings, letters, and public statements in
    pushing the IRS to do more

•   Seeking media coverage of the EITC gap, which includes discussion of what more the
    IRS could do

                                     Page 14
Project Coordination

The overall project will be coordinated by the ACORN Financial Justice Center and its Director
Jordan Ash.

Jordan Ash has worked with ACORN and its sister organization, ACORN Housing, for almost 10
years. He started as a housing counselor working with individual families and then became the
director of housing counseling for the Minnesota office. During this period under his leadership,
ACORN and ACORN Housing have directly helped over 1,100 low and moderate-income
families purchase homes and developed innovative lending partnerships with several state and
regional banks. He also spent a year on ACORN’s national staff conducting extensive research
on racial and economic disparities in mortgage lending. Within ACORN Housing, Mr. Ash
served as the national trainer and the coordinator for many of ACORN Housing’s national
projects. Mr. Ash has also played an important part in ACORN’s campaign against predatory
mortgage lending, working both with individual victims of predatory lending as well as working to
change the practices of some of the worst lenders.

Mr. Ash will be responsible for all aspects of this project. He will supervise ACORN’s VITA
Coordinator, Jeff Karlson, in setting up VITA sites. Jeff Karlson was ACORN’s New Orleans
Project Manager during the last Marguerite Casey grant. He will use the experience and
knowledge he gained from operating a VITA site to expand the project to these new cities. Mr.
Karlson will also implement and oversee ACORN’s EITC outreach in each of these cities.

Ash will work with individual ACORN offices directly and through ACORN’s Regional Director
structure to carry out the campaigns against Jackson Hewitt and Liberty Tax, coordinating the
offices efforts and providing the assistance needed for the campaign’s success. Ash will lead
ACORN’s negotiations with the RAL lender banks identified in this proposal.

Ash will also coordinate ACORN’s policy campaign by working with ACORN’s DC legislative
staff and national leaders on the federal level and local offices and Head Organizers on the
state and local level.

The ACORN Financial Justice Center will also work to build larger coalitions and support the
work of other groups around the issue of RALs, predatory mortgage lending, and other areas of
financial concern to lower income families, such as check-cashing, payday lending, and auto

                                         Page 15

Component A – Helping new households collect the EITC and
increasing the use of VITA sites for free tax preparation

     Budget Item                                      Dollar Amount
     2 outreach workers                               $4,800
        (5 hours a day, 6 days a week, $8/hr for 10
     1 supervisor and tax preparer for 17 weeks,      $6,800
     1 tax preparer for 12 weeks, $8/hr               $3,840
     Materials, telephone and overhead                $4,560
     Local Project Manager, ½ time for 5 months       $5,000
                            Site Total                $25,000
                            Total for 13 Sites        $325,000

    *Note: Computer and software likely donations from IRS.


     Budget Item                                      Dollar Amount
     National VITA/EITC Project Manager               $35,000
     Asst. to Project Manager                         $25,000
     Insurance, Benefits, Taxes                       $14,200
     Travel                                           $4,000
     Materials                                        $10,500
                           Total                      $88,700

                                     Page 16
Component B – Reducing the costs and abuses of Refund
    Anticipation Loans and other refund products

     Budget Item                                   Dollar Amount
     Campaign support-Jackson Hewitt, 69 cities            $414,000
     Campaign support-Liberty Tax – 60 cities              $300,000
     Financial Justice Center Director                      $36,000
     Assistant Director                                     $25,000
     RAL Campaign Field Coordinator                         $32,000
     Financial Justice Center Researcher                    $30,000
     Health Insurance, Benefits, Taxes                      $29,800
     Printing and Copying                                    $7,500
     Equipment (one lap top computer)                        $2,000
     Financial Justice Center rent and utilities             $6,500
     Telephone                                               $2,600
     Postage                                                 $2,000
     Travel                                                 $12,500
     Accounting, Audit, Legal, etc.                         $36,400

                          Total                           $932,400

                                    Page 17
City                    State        Number of Jackson   Number of Liberty
                                     Hewitt Offices      Tax Offices
Little Rock             AR           12                  1
Pine Bluff              AR           6                   1
Glendale                AZ           6                   1
Phoenix                 AZ           19                  10
Tucson                  17           3                   0
Fresno                  CA           3                   1
Los Angeles             CA           5                   9
Oakland                 CA           5                   0
Sacramento              CA           13                  1
San Bernadino           CA           2                   6
San Diego               CA           12                  2
San Francisco           CA           3                   1
San Jose                CA           7                   0
Santa Ana               CA           2                   2
Toronto                 ONT          0                   15
Denver                  CO           12                  8
Bridgeport              CT           1                   1
Hartford                CT           3                   3
Waterbury               CT           2                   1
Washington              DC           18                  15
Wilmington              DE           5                   2
Ft. Lauderdale          FL           2                   0
Hialeah                 FL           6                   2
Miami                   FL           32                  6
Orlando                 FL           17                  7
Palm Beach              FL           4                   1
St. Petersburg          FL           8                   1
Tampa                   FL           20                  8
Jacksonville            FL           45                  4
Atlanta                 GA           22                  16
Honolulu                HI           0                   1
Chicago                 IL           63                  41
Indianapolis            IN           15                  11
Louisville              KY           24                  3
Baton Rouge             LA           16                  3
Lake Chalres            LA           5                   0
New Orleans             LA           22                  3
Boston                  MA           10                  1
Baltimore               MD           27                  14
Prince Georges County   MD           3                   1
Detroit                 MI           5                   22
Minneapolis-St. Paul    MN           13                  4

                           Page 18
Kansas City    MO         10   10
St. Louis      MO         24   14
Charlotte      NC         17   4
Newark         NJ         4    7
Patterson      NJ         8    2
Albuquerque    NM         17   2
Buffalo        NY         9    4
Long Island    NY         10   3
New York       NY         47   11
Cincinnati     OH         24   4
Cleveland      OH         8    10
Columbus       OH         18   12
Toledo         OH         14   0
Portland       OR         12   1
Allentown      PA         3    0
Harrisburg     PA         8    0
Philadelphia   PA         34   6
Pittsburgh     PA         18   8
Providence     RI         6    1
Memphis        TN         34   4
Dallas         TX         41   6
El Paso        TX         37   0
Fort Worth     TX         23   3
Houston        TX         42   16
San Antonio    TX         49   8
Arlington      TX         12   2
Norfolk        VA         13   28
Seattle        WA         5    7
Milwaukee      WI         9    8

                Page 19

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