United Ways of California Praises Inclusion of CalEITC Outreach and Free Tax Preparation Assistance Funding in Legislature’s Budget, Urges Governor Newsom’s Approval
FOR IMMEDIATE RELEASE
Tuesday, June 15, 2021
Anna Hasselblad, Public Policy Director
United Ways of California
(Sacramento, CA) - California legislators approved a $15 million investment in CalEITC Outreach and Free Tax Preparation Assistance (FTPA) to leverage one of our state’s most powerful poverty-fighting tools, the California Earned Income Tax Credit (CalEITC). United Ways of California enthusiastically applauds this action and urges Governor Newsom to approve this funding in the final budget agreement.
This investment in outreach and free tax filing assistance comes after weeks of intense deliberation by the Senate and Assembly and months of advocates pushing for targeted investments to ensure more households are aware of and can get help filing their taxes to claim these credits. This funding will emphasize reaching and assisting California’s immigrant and underserved communities, who have been hit especially hard during the economic crisis brought forth by COVID-19. This decision redresses a failure to fund free tax filing assistance in last year’s budget, and in addition, it calls for this funding to be “ongoing,” which would remove uncertainty about the continuation of the program. The $15 million in ongoing annual funding will be allocated for CalEITC Outreach and FTPA grants to qualified community partners.
Further, as co-sponsors of AB 1515 (Santiago) which would codify the policy to implement this funding in an equitable manner to target resources to reach those that experience barriers to taking advantage of tax credits, we are pleased to see the budget investment align with this critical policy. AB 1515 will ensure outreach and free tax preparation services are able to focus on reaching extremely low-income households, likely ITIN eligible workers, populations with limited English proficiency, rural communities, and other hard-to-reach populations.
California is leading the nation in innovation to expand access to credits for working families, becoming the second state to make immigrant families filing their taxes with an Individual Taxpayer Identification Number (ITIN) eligible for the state EITC, Young Child Tax Credit, and more recently the Golden State Stimulus. This is thanks to years of work by legislators and the CalEITC Coalition, then led by United Ways of California, Children’s Defense Fund California, and the California Immigrant and Policy Center, culminating in an agreement with Governor Newsom to include ITIN filers in state tax credits, which went into effect on January 1st, 2021. These credits for low-income working families not only improve lifelong health, education, and income results for children, they also boost local economies.
Unfortunately, eligible households may not be aware of the credits and often face barriers in filing returns in order to claim them. It is critical now that the state makes targeted investments in outreach and assistance so that community-based organizations can directly address issues of awareness and accessibility in linguistically and culturally competent ways.
The COVID pandemic compounded these challenges for working families, as many community-based organizations that historically have provided free filing assistance from IRS-certified volunteers limited the number of people they could serve, and many closed altogether. Today’s actions by budget leadership means more well-trained volunteers will be able to help families in need in the coming years.
In addition to the proposed Outreach and FTPA funding increasing CalEITC claims, we also now know how critical the federal stimulus payments have been with a report showing that they helped families afford basic necessities and reduced anxiety and depression. We can assume the same sizable impact from the Golden State Stimulus 1 and 2 in California, but it requires that more eligible Californians successfully file their taxes. This is another example of how important free tax preparation assistance is to not only the economic wellbeing of our communities but the mental wellbeing of families.
It is for these reasons that we hope Governor Newsom recognizes the need for this funding as well and approves this $15 million in annual and ongoing funds for CalEITC Outreach and FTPA.