New America Foundation Commends IRS Project Helping CA Workers Claim Refunds, Stimulate Economy

Nov. 18, 2010 - PRLog -- SACRAMENTO -- More than 46,000 California workers who may have missed out on a significant federal tax credit - and local economies that may be losing the stimulus effect of workers spending those credits - are getting a boost from the Internal Revenue Service this November. The IRS is mailing notices to targeted filers this week and next week as part of a special outreach project in California to encourage more families to claim their Earned Income Tax Credit (EITC), which the New America Foundation found stimulates local economies but suffers from low claim rates in the state.

"We applaud the IRS for taking a proactive approach to help Californians claim their EITC refund," said Olivia Calderon, California Legislative Director at the New America Foundation. "This credit helps families as well as local economies, and these notices are letting thousands across the state know that even though it's almost Christmas, it's not too late to claim their refund!"

Notices are being sent throughout the state, with the greatest portion - more than 12,000- going to filers in Los Angeles. That county has the largest number of EITC claimants, but also leaves an estimated $370 million unclaimed.

The problem is statewide: the New America Foundation's report "Left on the Table" estimated that 800,000 Californians left $1.2 billion in EITC refunds unclaimed in 2009. Created under the Nixon Administration, the EITC targets low-income workers to combat poverty and incentivize work.

Refunds from the EITC boost the economy because they place money directly into the hands of those who are likely to spend most of it within their communities.  Spending resulting from California residents' receipt of the credit creates over $5 billion in business sales in the state, supports almost 30,000 jobs, and creates more than $1.2 billion in labor income. Low claims of the credit hurt families as well as local economies and state tax revenues.

This current effort by the IRS is based on a proven New York model. That successful effort helped to bring more than $14 million in federal EITCs into the state.

"We're always hearing how California doesn't get its fair share of federal funds. Especially in light of the $25 billion hole in California's budget, direct investments like this can yield a huge return," said Maria Sotero, Program Associate at the New America Foundation. "These families are losing out on a credit of more than $1,000 on average. That amount really makes a difference."

The New America Foundation has long worked toward helping people permanently exit poverty by advancing financial empowerment policies to make it easier for them to build savings and enter the financial mainstream.

Information about the IRS special EITC outreach project is available here: http://www.eitc.irs.gov/ptoolkit/caproject/

The Left on the Table report is available here: http://newamerica.net/publications/policy/left_on_the_table

Please contact Elizabeth Wu with press inquiries at 510-295-9859 or wu@newamerica.net.

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The New America Foundation is a nonprofit, nonpartisan public policy institute that invests in new thinkers and new ideas to address the next generation of challenges facing the United States.