For Octavia Teharte, a single mother of four, tax season meant a brief financial respite, accelerated by quick cash in the form of what in tax circles is called a refund anticipation loan.
"Like everybody else, bills were coming and coming fast and I needed money fast,'' the St. Petersburg woman said.
Once, the fees handed over for the much-needed funds could have paid her electric bill.
Consumer advocates have long lobbied against the pricey, short-term loans that are based on a taxpayer's anticipated refund and often targeted at low-income workers. Beginning this year, the Internal Revenue Service will no longer provide information about taxpayer government debt — unpaid child support and federally funded student loans, for example — used by tax preparers and financial institutions to determine the loans. That change will make it harder on those tax loan businesses and likely send more people to free preparation services.
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"The IRS told us to be prepared to be inundated for the first six weeks,'' said Cherin Stover, director of the Wealth Building Coalition of Pinellas County, which offers free income tax preparation to low- and moderate-income residents.
The organization, which works in partnership with the IRS, will begin this year's free tax program Tuesday at a dozen Volunteer Income Tax Assistance sites stretching from St. Petersburg to Tarpon Springs.
Monday, the coalition, which also offers financial education workshops and helps taxpayers open bank accounts, kicked off the tax season with a program attended by bankers, chambers of commerce, government officials and nonprofit organizations. U.S. Rep. Kathy Castor, St. Petersburg Mayor Bill Foster, Tarpon Springs Mayor David Archie and two IRS representatives were among the speakers in Largo.
Besides spreading word of its free services, the Wealth Building Coalition is trying to educate residents about the often unclaimed federal earned income tax credit that could result in hundreds and even thousands of dollars in refunds for taxpayers.
"It has a multimillion-dollar impact on just St. Pete," Foster said of the underutilized tax credit.
Juvenile Welfare Board executive director Gay Lancaster said the money families save by going to a VITA site and the refunds they receive through the earned income tax credit help parents provide stable homes in a county where 28,000 children live in poverty.
The earned income tax credit, a benefit for low- and moderate-income workers, offsets the payroll and income taxes they pay. Under the economic stimulus package, qualified taxpayers will benefit from a temporary increase in the credit again this year.
Janis Ford, community enrichment and Weed & Seed coordinator for the city of St. Petersburg, noted that the Wealth Building Coalition was launched eight years ago, after it was learned that more than $20 million in earned income tax credit was going unclaimed in Pinellas County.
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For the Tampa Bay Beaches Chamber of Commerce, telling eligible workers about the free tax service and earned income tax credit is not enough. President and chief executive officer Robin Grabowski said the chamber has asked large resorts to offer the tax program on their properties as a convenience to hospitality workers. Beginning this tax season, the Don CeSar Beach Resort and Spa, TradeWinds Island Resort and Sirata Beach Resort will do so, Grabowski said.
Kathleen Peters, vice president of public affairs for the Clearwater Regional Chamber of Commerce and South Pasadena mayor, said the chamber also is working with businesses to inform employees about the tax credit and free tax preparation.
"When you hear it from your employer, you know it's real,'' said Laura Berkowitz, communications manager for the Pinellas County Human Resources Department.
Last week, both the National Consumer Law Center and the Consumer Federation of America, which estimated that about 7.2 million taxpayers received refund anticipation loans in the 2009 tax filing season, encouraged low-income taxpayers to take advantage of free services such as those offered at VITA and AARP Tax-Aide sites.
Teharte, 40, the St. Petersburg mother, stopped borrowing money to expedite her refund after discovering the VITA sites. Now she urges family and friends to do the same. "It's really hard to change behaviors,'' she said. "It's hard to live for tomorrow when you can barely live for today.''
Waveney Ann Moore can be reached at firstname.lastname@example.org or (727) 892-2283.