PEWAUKEE, Wis. - The Wisconsin Credit Union League was recentlyrecognized for its work with the Wisconsin Department of Revenue ona project designed to decrease consumers' reliance on refundanticipation loans. According to the Wisconsin Council on Children& Familes, in 2003 nearly 11% of tax filers in Wisconsinclaimed the federal Earned Income Credit aimed "at lifting theworking poor out of poverty." Of those, 22.1% received theirrefunds through a RAL, a short-term loan secured by a tax filer'sexpected refund and which the agency says is "aggressively"marketed to the poor by many paid tax preparation firms. In itsreport Refund Anticipation Loans in Wisconsin - Little Gained andMuch Lost for Low-Income Workers and Local Economies^, the agencystated that the costs of RALs for the working poor and theirfamilies "are significant," and local economies are "shortchanged"when RAL fees divert EITC dollars. Consequently several states andmunicipalities around the country have taken steps to control thespread of RALs in their communities. One of the solutions beingpursued is the expansion of efforts to increase accounts amonglow-income residents at financial institutions. "The WisconsinDepartment of Revenue is currently working with the WisconsinCredit Union League on a project aimed at reaching out tolow-income workers and immigrants and helping them establish bankaccounts into which they can have their tax refunds deposited.While this project is at an early stage, it is just the kind ofeffort that could pay real dividends for low-income workers andtheir local communities. The Department and the Wisconsin CreditUnion League are to be applauded for their efforts," the WisconsinCouncil on Children & Families stated in their report. Thereport concluded stating that, "The EITC - perhaps the mostsignificant effort to move low-income workers out of poverty - hasby many counts been successful. High-cost financial products suchas refund anticipation loans diminish the credit's impact, however.A concerted effort to increase free and low-cost tax preparationassistance for the poor, to "bank the unbanked", to increase theconsumer's awareness of less expensive options, and to streamlinetax forms and instructions, would shore up the benefits of thefederal EITC and similar state credits, and would benefit thousandsof low-income workers throughout the state of Wisconsin." -

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