Private employers help promote the EITC

Some private companies are expanding their role from employing people to empowering them. One tool of choice is the Earned Income Tax Credit (EITC), which provides refundable tax credits to low- and moderate-income workers.

Employers can help their employees take better advantage of the EITC by providing free, on-site tax preparation services and accompanying financial education programs. The benefit to employees is obvious: workers who claim EITCs will receive hundreds or thousands of dollars. Employers benefit, too, but in less direct ways. On an aggregate level, the EITC is credited with helping workers be more productive by lessening the stress of financial pressures. Also, the EITC may reduce turnover by encouraging low- and moderate-income workers to stay employed in order to earn the credit.

The nonprofit Center on Business and Poverty in Madison, Wis., specializes in encouraging companies to promote the EITC in the workplace. The center's director, John Hoffmire, has convinced Staples Corporation, U.S. Airways, and several hospitals and banks to provide employees with free tax preparation and financial literacy programs.

The Staples initiative, which began in 2004, has now expanded to nine states and 19 of the company's business locations. Employees who are eligible for the EITC get free tax preparation services through a partnership with H&R Block, whose associates use Savings Point and Benefits Enrollment, a pair of special software programs from the company Nets to Ladders that, respectively, create bank accounts and screen individuals for eligibility for income-based public services. Eligible employees also participate in financial education workshops.

Some 500 Staples employees have taken part in the tax preparation and financial literacy courses. According to Hoffmire, surveys conducted after the program was implemented indicate "universal support" from employees.

Resources for employers

The following organizations can provide additional information to employers who have an interest in promoting the EITC.

Center on Business and Poverty, www.cobap.org.
The Center on Budget and Policy Priorities, at www.cbpp.org, provides free information and publications to businesses that wish to promote the EITC and other federal tax credits to their employees and the community at large.
The Internal Revenue Service provides extensive resources on the EITC for individuals, employers, and tax professionals. Visit www.irs-eitc.info/SPEC.
Corporate Voices for Working Families, at www.cvworkingfamilies.org, creates a free employer guide each year to help companies reach out to low-income employees. It provides tools on everything from paycheck stuffers to best practices for talking to employees about tax credits.
The Children's Defense Fund New York has helped several major retail and fast-food employers inform workers about tax credits. The organization trains human resource representatives and provides posters and other handouts. Visit www.cdfny.org.
The Itasca Project, a Twin Cities-based partnership of influential corporate and political leaders who are seeking to create positive social change, has created the Task Force on Financial Fitness, which targets employers for the purpose of promoting direct deposit, employee education programs, access to financial resources, and awareness of the risks of "fringe" banking services (check-cashing stores, etc.). Call 612-371-3151.