Happy Holidays from the IRS

Excitement and joy are not the typical responses to receiving a letter from the Internal Revenue Service. But an effort launched by the IRS in California is changing that- just in time for the holiday season.

This week and next week, 46,000 households throughout California are getting letters in the mail telling them they may have qualified for the Earned Income Tax Credit last year, and that it's not too late to claim their refund (which for these folks, is an average of $1,400). Talk about a Christmas bonus.

The California Asset Building Program released a statement today applauding this direct outreach targeting working families in the state who are leaving their EITC on the table. The announcement yesterday by Los Angeles City Councilmembers Richard Alarcon and Paul Krekorian cited the astounding $1.2 billion blow to Californians and the economy when these refunds go unclaimed- the findings from our March report on the credit and its stimulus effect.

The Council's partnership with the Community Development Department and the IRS to mail these targeted notices is yet another concrete action resulting from that report- and with 2010 the second and final year of the expanded EITC, we can only hope takeup of the credit and this news increases.

When we testified to the Council's Committee on Jobs and Business Development last year, we also heard the background on the successful New York outreach mailer that boosted claims by 44% - and the Office of Financial Empowerment's Sam Miller framed this sort of direct, up-front investment in a new way: As the duty of the IRS.

As Miller said, 

...[T]he project sends a powerful message to the public and the people in government who serve them: tax agencies have an obligation not just to make sure people pay what they owe, but also to help people get credits, tax breaks and other benefits to which they are entitled. With this project, I believe we have raised the bar for what tax administrators can and must do to help the people they serve.

This is exactly the re-definition this effort needs. Maybe a letter from the IRS will never be, as Alarcon put it, like "a bunch of balloons and a large cardboard check," but mailers you won't want to throw away could help people feel more confident claiming the refunds they qualify for. And that's good for families, local economies, and the State.