Need help with your taxes? Bill would expand free preparation services

Perhaps they’re looming on your desk. Your tax forms emit their siren call, begging to be completed. But maybe, like many people, you’re intimated by their demands.

Help may be on its way.

If your annual income is less than $54,000 or if you’re over age 60, have a disability or limited English-speaking capabilities, you’re probably eligible for free tax preparation assistance. There are two programs supported by the Department of Revenue, Volunteer Income Tax Assistance and Tax Counseling for the Elderly.

Basically, you bring your tax information and trained volunteer tax preparers put your returns together. But those services are in high demand, and there are 20 counties without any free tax preparation sites.

Rep. Ben Lien

Rep. Ben Lien (DFL-Moorhead) hopes to improve the programs by doubling their funding. HF1862 would increase the budget for the taxpayer assistance grant programs from $400,000 to $800,000 for Fiscal Years 2020 and 2021. It would also add another tool to the tax assistance sites’ offerings in “financial capability services,” which means volunteers would offer counseling on how to get yourself on stronger financial footing.

The bill was laid over Thursday by the House Taxes Committee for possible omnibus bill inclusion. Its companion, SF1900, sponsored by Sen. Mark Koran (R-North Branch), awaits action by the Senate State Government Finance and Policy and Elections Committee.

In 2018, 33 nonprofits across the state offered 100 free tax preparation sites that received funding through the taxpayer assistance grant program. At those sites, 104,000 tax returns were prepared. The executive director of the state’s largest provider of free tax assistance, Prepare + Prosper, is Tracy Fischman.

“Requests are double the amount of available funding,” Fischman said. “These sites have to turn people away every year. … Since 2015, we’ve had a net loss of 33 tax sites across the state, largely because it is so difficult to secure funding to keep them operational.”

She believes the bill’s increased focus upon developing financial capability will make a big difference to low-income Minnesotans.    

“According to the Federal Reserve Board, about 40 percent of households would not be able to cover a $400 emergency,” Fischman said. “This is even more pronounced in communities of color. Black and Latino households have seven to 10 times less in liquid assets.”

The “Tax Time Savings Bill” is supported by the Minnesota Asset Building Coalition, the Minnesota Bankers Association, the Minnesota Credit Union Network and the Minnesota Insurance and Financial Services Council.

Rep. John Petersburg (R-Waseca) asked about free services he’d seen offered on television.

“There are certainly free filing software options,” Fischman said. “There are ways in which some of them advertise that I think can be misleading. For example, if you get the earned income tax credit or the child tax credit or the working family credit, it isn’t always free. With VITA, free does mean free.”