The New York Times examines how people in poverty are targeted with outrageous tax preparation fees

A story in the Tuesday, April 8, 2014 edition of The New York Times highlights the dangers that people in poverty may face when having taxes prepared by organizations charging high fees.

The New York Times

Click on the image above to be redirected to The New York Times website.

In an article entitled “Tax Preparers Targeting Poor With High Fees,” reporter Campbell Robertson notes that:

“they begin showing up in empty storefronts in neighborhoods where empty storefronts are easy to come by. Cars with phone numbers brightly displayed on the doors roll down the streets, and signs pop up along the sidewalks promising fast money.”

Tax refunds often represent the largest one-time cash receipt an impoverished family will receive all year. Some dishonorable tax preparers wish to become a part of this cash influx process and charge outrageously high fees.

This is one of the many reasons United Way, the Earned Income Tax Credit Alliance and Volunteer Income Tax Assistance have partnered to provide Free Tax Prep sites across the Mid-South. At these sites, trained volunteers will help prepare and file your taxes at no cost, with no hidden fees or charges. It is an important part of United Way’s work to improve financial stability across the Mid-South.

Robertson’s article in The New York Times cites how close to home the problem has been, writing that:

last fall, the owners of two national chains aimed at low-income customers — Mo’ Money Taxes, of Memphis, and Instant Tax Service, of Dayton, Ohio — were permanently barred from the business after being charged with a litany of abuses, including encouraging fraudulent tax returns and charging “deceptive and unconscionable” fees.

The article also shows how several fees can add up to a big reduction in a tax refund:

Ms. Todd looked through the sheaf of papers only later to find the fees that had been discreetly subtracted: $550 for tax preparation, an “electronic filing fee” of $99, a “service bureau fee” of $25, a “transmitter fee” of $99 and an “electronic refund product processing fee” of $32.95

…for a grand total of $805.95 spent on services and extra fees.

No such expenses or fees exist at the Mid-South’s Free Tax Prep sites. There is NO COST to people filing taxes at Free Tax Prep sites. To find the location in your neighborhood, call 2-1-1 (alternate number 901.415.2790) during normal business hours.

You can follow our Free Tax Prep movement on Facebook at https://www.facebook.com/FreeTaxPrepUWMS and on twitter @FreeTaxPrepUWMS.

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About Dave Skorupa

Dave Skorupa is a member of the Communications team at United Way of the Mid-South, Memphis, TN.
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