AccountAbility Minnesota Presented by: Tracy Fischman , Executive Director

1. AccountAbility Minnesota Presented by: Tracy Fischman, Executive Director tfischman@accountabilitymn.org 651-287-0187 ext. 105 www.accountabilitymn.org

2. Overview of Presentation • Organization overview • Need for change in service delivery • AccountAbility Minnesota’s alternative model – Virtual VITA • Individual Tax Organizer (ITO) • Impact of alternative model • Discussion

3. Overviewof AccountAbility Minnesota

4. Note: AAM provides free tax assistance and financial services at two locations after the tax season from May through October

5. Virtual VITA Tax preparation for the disability community

6. Basis for change in service delivery for persons with intellectual disabilities - • Incorrect reporting of taxable and non-taxable income on federal and Minnesota tax returns by tax preparers without adequate training on the unique tax issues for persons living in assisted living housing • Training needed to help case managers and other caregivers to gather the necessary tax documents for accurate tax preparation • Scheduling Metro Mobility transportation services to and from the tax location was cumbersome and difficult due to unpredictable time length of tax preparation appointment • Increased stress placed on the taxpayer when wait times extend beyond their comfort level

7. Tax preparation model – Virtual VITA • In 2003, AAM developed the Individual Tax Organizer (ITO) formwith support from its partners providing housing and employment for individuals with intellectual disabilities • AAM provides special training, resources and tools for volunteers for this non-traditional model • Partnerships developed with independent assisted living housing programs to train their case managers and caregivers to gather necessary tax information and documents needed • Method also available for senior citizens and other individuals with disabilties unable to access AAM’s traditional tax services

8. Individual Tax Organizer – Virtual VITA Process at-a-glance

9. Address critical tax information • Can the individual be claimed by another person? • Type of disability as it relates to filing a tax return – permanently disabled or blind? • Lived in an assisted living facility • Marital status • Promote direct deposit of refunds Identify taxable and non-taxable income • Wages, social security/RSDI benefits, pension/annuity, interest and unemployment • Tax consequences of self-employment or working in a federally-subsidized sheltered workshop • State and federal housing subsidies

10. Secure taxpayer consent • Inform taxpayer of potential use of their tax return information in aggregate data • Option to self-select PIN for e-file • Inform taxpayer of their right to contact Treasury Inspector General for Tax Administration, if they believe their information was disclosed improperly

11. Disability community AAM summary 2011

12. Impact of service • Use of ITO tax preparation has increased dramatically (now serving almost 1,200 individuals) • Ease of access to meet federal and state tax filing requirements • Reduction of errors in tax preparation through specialized training and tools for case managers, caregivers and volunteers • Increased capacity to serve more taxpayers due to reduced time expended for appointments, travel and follow-up needed to gather additional tax documentation

13. Virtual VITA Tax preparation for remote communities

14. Basis for change in service to remote locations • People living in areas with no access to free tax prep • Lack of resources to operate VITA/TCE tax sites • Opportunity to use skilled volunteers to provide tax prep for complex returns and post tax-seasons service New tax preparation model – Virtual VITA • Simulate in-person tax prep with technology (webcam and Skype) • Host Site conducts all screening and intake • Preparation Site prepares, reviews and e-files

15. Remote tax preparation– Virtual VITA At-a-glance

16. Host Preparation Site Site • Provide IRS-certified volunteers • Interview taxpayer and review documents • Prepare tax return and conduct quality review • Fax or email completed return to Host Site • E-file and follow-up on rejected returns • Conduct screening and intake process • Forward taxpayer documents to Preparation Site by fax, email, mail or document manager, such as FileWorks • Assist taxpayers with signing required forms

17. Technology • Broadband internet connection • Fax machine or scanner with email access and printer • Laptop or computer • Webcam with microphone • Video conferencing software (same at both sites) • Document manager (optional)

18. Leveraging Tax Credits Integrating Savings and Asset Building During Tax Time

19. Why tax time?

20. Asset Building at Tax Time at AAM

21. It’s expensive to be poor The average unbanked worker spends over $40,000 over a lifetime just to cash their paycheck (League of Cities and Brookings Institution) Banking Status1: • 36% of Minnesota households with income levels below $15,000 were unbanked or underbanked, and 18% of households with incomes below $30,000 were un-or under-banked. • African-American households comprise over half of Minnesota‘s unbanked and underbanked. 1 Federal Deposit Insurance Corporation. (2009). FDIC National Survey of Unbanked and Underbanked Households. Washington: FDIC. Source: Center for Responsible Lending

22. AAM’s Financial Services Evaluation and Customer Needs Assessment

23. The Objectives • To assess the financial planning and service needs, practices and experiences of AccountAbility Minnesota customers. • To assess the strengths and gaps of existing financial products and services provided by mainstream financial institutions compared to those provided through Alternative  Financial Services (AFS) (or “fringe” services) for AAM customers. • To develop and/or refine strategies, tactics and/or services for improving the financial well-being and long-term asset accumulation of customers. Methodology • Literature review • Quantitative analysis of data of 886 people who opened savings accounts with US Federal Credit Union through AAM • Surveys and focus groups with 150 customers • Interviews with financial institutional partners, T.A. partners, and seasonal staff Note: Given the complexity and nature of social science research, it is important that the findings of this report be considered cautiously and in context.

24. Unbanked to Assets: Meeting the needs of low-income individualsSummary of evaluation and findings We asked our customers—48 by focus group and 105 by survey—to speak candidly about their experiences and goals. Here is what we learned…………. • Low-income customers have long-term savings goals just like everybody else, and enjoy the sense of security that a savings account brings. But long-term saving often isn’t their first priority. Our customers face more urgent, short-term concerns: 59% mentioned recent unexpected expenses like medical bills; 56% want to pay down debt. • The savings aspirations of the customers we serve clash with their circumstances. Most report that their biggest barrier to saving is not having enough money to save (71%). Yet a desire still exists and many said they need a place and strategy to begin saving, however incremental. • Low- to moderate-income individuals want timely, relevant financial education. Newly banked customers want to learn more about improving credit, managing debt, dealing with unexpected expenses, and personal investment and need access to opportunities that meet them where they are. • Our customers see many mainstream financial services—and the service fees and minimum balance rules that go with them—as being out of reach. They know that Alternative Financial Services (AFS) such as check cashing and payday loans are costly but in a pinch they turn to AFS’ speedy services and transparent, up-front fees.

25. And we looked at data from our 886 customers that opened savings accounts at a local credit union. Here is what we learned…………. • Low- to moderate-income individuals find it hard to maintain accounts and “graduate” to new products in mainstream financial institutions. Trust and relationships matter. Of the 886 AccountAbility Minnesota-affiliated members that opened accounts at US Federal Credit Union since 2006, 567 (64%) of those accounts have closed. • The median credit score of a typical US Federal Credit Union member is 758, that’s noticeably higher than the median credit score of AccountAbility Minnesota-affiliated members, which is 552. Typically, credit scores below 600 are unlikely to have a loan application approved unless it is a cash secured loan. • Our customers do want to bank with mainstream institutions provided that they offer an atmosphere of respect, and services/products relevant to their needs. • Banking status impacts future assets. 35% of banked respondents planned to use their refund to build savings for the future, compared to 10% of unbanked. • Very low-income households represent a disproportionately high share of the unbanked. 55% of the unbanked respondents made less than $10,000 compared to 26% who were banked. Similarly, 30% of banked respondents made over $25,000 as compared to only 6% of unbanked.

26. Implications for our work While facilitating access to financial products and services is an essential tool to encourage low-income individuals to become economically secure, more needs to be done by way of: • Integration of financial services in tax process • Product development/enhancement • Leverage partnerships & robust referrals to sustain beyond tax time • Relationship building • Marketing & messaging

27. Digging Deeper: Forthcoming Data Collection & Analysis • Survey data to develop a theoretical model of savings behavior • What are the characteristics of those who plan to save a portion of their tax refund? • Are the characteristics of those who plan to save different from those who plan to pay bills and debt? • Do money management practices differ between banked and unbanked respondents? • Do banked and unbanked respondents use different financial products/services? • USFED data to further analyze account use • Why or how accounts have closed (slow declines, immediate withdrawals, flat accounts with sudden withdrawals later, accumulation for those not yet closed, etc.) • Information on bank balances over time. • What are the paths for using/accessing additional products? • What additional demographic information is available (race, marital status, etc.)? • How many of the customers did/do direct deposit of paychecks, and – if available – what other information is available about them?