February 12, 2005: NORTON TO INTRODUCE BILL TO PROTECT LOW INCOME RESIDENTS

Washington, DC--At a news conference at her tax preparation fair, Congresswoman Eleanor Holmes Norton (D-DC) today said that she intended to introduce legislation to correct tax preparers abuses of low income taxpayers, especially recipients of the Earned Income Tax Credit (EITC) and that she would ask local media that carry advertisements for refund anticipation loans to take steps to help educate the public. Norton will be an original cosponsor of the Taxpayers Abuse Prevention Act aimed primarily at keeping tax preparers from using the Earned Income Tax Credit to secure refund anticipation loans, to protect the legal rights of taxpayers to protest unfair loans, and to help families open bank accounts to help facilitate faster tax returns in the future.

Tammy Edwards, an EITC recipient who used a tax preparer this year, spoke at the news conference, and her statement is available. Also at the press conference, Deborah Cutler-Ortiz of the Children’s Defense Fund revealed what Norton called “startling data” showing that 43% of D.C. EITC recipients are paying for early refunds and tax preparation because most of them are unaware that both are available free of charge.

Norton said, “Our EITC recipients, most of them single parents, are giving tax preparers money that Congress and the District voted to provide them only because they and their children earn wages that are so low that these residents need a cash supplement from the government for living expenses. Some tax preparers have hit a new low by using television and other media ads that clearly target low income residents, most of them black and Hispanic. Many of them have no idea that to get early refunds they often are paying exorbitant interest rates.

“I will release a letter next week to local media that carry these ads, asking that they inform viewers of the availability of free tax preparers and that they assist in encouraging compliance with the Truth in Lending Act by informing viewers of the actual annualized interest rate on early refund loans. This service can be done in a variety of ways, for example, through written or oral statements carried with the ads or through public service announcements. If tax preparers are to profit from government funds meant for the poor, anyone who benefits, even unwittingly or indirectly, should help inform those least likely to be informed.”