For Immediate Release:
SAINT PAUL, MN – According to the Corporation for Enterprise Development (CFED), a national organization focused on helping low- and moderate-income households build assets, nearly 28% of Minnesotans don’t have enough savings to weather an emergency and nearly 17% do not have full access to financial institutions, forcing many to turn to payday lenders charging high rates, in some cases 273% APR. That is why the Minnesota Departments of Commerce and Revenue have partnered with AccountAbility Minnesota (AAM) to highlight the success of 1,000 Minnesota families that have saved $1.6 million in refunds making them better prepared for emergencies. To celebrate this success, the end of tax season and Financial Capability Month, Commerce, Revenue, and AccountAbility are sharing tips and real-life stories from Minnesotans that have used tax time as a “money moment” to build greater financial security.
“Financial Capability Month and tax time provide a great reminder to save and make financial changes that result in greater security financially,” said Commissioner Mike Rothman. “Taking steps at tax time, for example, to create a rainy-day fund can help prevent the need for costly short-term loans that can negatively impact a household budget.”
Tax Time as an Opportunity to Build Financial Security
For low- to moderate-income Minnesotans, tax time can mean significant refunds due to various tax credits, like the Earned Income Tax Credit (EITC), which according to the Brookings Institution is the nation’s largest anti-poverty program. The EITC can be as large as $6,044 for some families, with the average credit in Minnesota being $2,000. Minnesota has a state version called the Working Family Credit, which was recently enhanced with the new tax bill.
“With the addition of $49 million in middle class tax cuts passed by Governor Dayton and the legislature this year, it is more important than ever for taxpayers to be aware of the tax credits and deductions they may qualify for and to make sure they correctly claim them when preparing their taxes this year,” said Revenue Commissioner Myron Frans.
AAM has been providing free tax preparation and financial services in Minnesota for 41 years. This tax season they have leveraged the help of 530 volunteers to prepare taxes for nearly 10,000 Minnesotans who have received nearly $20 million in refunds so far. The organization has a strong focus on savings and through its “Got Some, Save Some” savings campaign 1,000 of its customers have saved $1.6 million.
“Tax refunds not only significantly boost incomes but also provide an opportunity for families to think about their financial future,” said Tracy Fischman, executive director of AAM. “It’s the one time of year many families receive a significant sum of money and are in a position to pay off debt and save for emergencies, increasing their financial capability and lessening their reliance on costly alternative financial services, like payday lenders.”
Each year, payday lenders in Minnesota drain $9 million from the economy, with high fees and lending traps. Without options at mainstream financial institutions, often due to blemished histories, a borrower in need of quick cash would pay an average APR of 273% on a $380 loan in Minnesota. Using tax time to save can help prevent the need for high-cost, short-term loans.
Real Success, as Told Directly from a Minnesotan
Barbara started using AAM’s free tax services three years ago, after having paid for tax preparation. “I was going to a paid preparer in my neighborhood and was paying a lot of money…it was a waste of money,” said Barbara.
In addition to free tax help, Barbara opened a savings account and a prepaid debit card. In the past, Barbara struggled to make ends meet and relied on payday loans to keep her afloat between paychecks. The debt that she owed the lenders began to mount, causing her checking accounts to become overdrawn and, ultimately, close. Working with a financial services specialist at AAM, Barbara opened accounts that would allow her to save her refund and conduct basic financial transactions. For customers like Barbara, AAM’s free financial services mean lessening the reliance on alternative financial services and getting a second chance at accessing the financial mainstream. These services, in conjunction with free tax preparation, ensure that low- to moderate income individuals and families can improve their financial capability.
About AccountAbility Minnesota
AccountAbility Minnesota helps hard-working, low-income taxpayers move towards economic security by providing free tax and financial services. The organization was created 41 years ago by a group of social-justice minded accountants committed to ensuring that one’s ability to receive tax assistance – and related financial services – should not depend solely on one’s ability to pay. Over the years, it has expanded its work by integrating access to affordable financial services that promote savings and facilitate access to mainstream financial institutions, by helping to build the capacity of other organizations providing these services, and by utilizing its experiences to advance policies and practices that directly benefit the people it serves. In 2013, AAM enlisted the help of more than 550 volunteers who prepared taxes for 13,231 individuals who received a collective $24.3 million in refunds.
The Commerce Department is here to help
Visit the Commerce Department’s blog for more information about how to save or listen to the Minutes with Mike podcast series to learn more about financial capability and the “money moments” we encounter in our lives: tax day, preparing for a post-secondary education, planning for retirement, and many more.
If you believe you have been a victim of a fraud or scam, or if you suspect fraud, report it – so that others do not fall victim. If you think you have been a victim of a scam or fraud, contact the Consumer Response Team at 651-539-1600 or 1-800-657-3602. Complaints can also be sent by email to consumer.protection@state.mn.us or by mail to Minnesota Department of Commerce, 85 7th Place East, Suite 500, Saint Paul, MN 55101.
Department of Revenue
The Minnesota Department of Revenue manages the state’s revenue system and administers state tax laws. We manage 28 different taxes, collecting over $16.5 billion annually. This money funds education, local government aid, property tax relief, social service programs, highways, economic development incentives and grants for businesses, and other state programs and operations.
WHO:
Commissioner Mike Rothman, Minnesota Department of Commerce
Commissioner Myron Frans, Minnesota Department of Revenue
Tracy Fischman, Executive Director – AccountAbility Minnesota
Assistant Commissioner Terri Steenblock, Minnesota Department of Revenue
WHAT:
Visit to a free tax site and media availability to talk about tax time as a money moment. AAM has helped their clients save $1.4 million this tax season to help prevent the use of predatory financial products.
WHEN:
Tuesday, April 15, 2014
10:00 AM – 11:00 AM
WHERE:
AccountAbility Minnesota’s Saint Paul Location
2610 University Ave W,
Saint Paul, MN 55114
Copyright © 2014 Minnesota Department of Commerce. All Rights Reserved.
Minnesota Department of Commerce + 85 Seventh Place East + Saint Paul, MN 55101