Helping Constituents Save at Tax Time

On Wednesday, February 2, the Asset Building Program at the New America Foundation along with the Doorways to Dreams Fund (D2D), the Congressional Savings and Ownership Caucus and the Savings Bond Working Group hosted this briefing at the Cannon House Office Building. The event connected legislators with the information and tools necessary to educate constituents on how to take advantage of the new opportunity to buy savings bonds with tax refunds.

Justin King from New America provided an introduction and overview and Zack Marshall, Legislative Assistant to Rep. Cooper, followed with welcoming remarks detailing the long and bipartisan history of legislators pushing the IRS to better serve taxpayers and provide them with more opportunities to save.

Donald Dill from the Internal Revenue Service (IRS), provided valuable insight into the mechanics of the project, targeting what the IRS is doing to implement change, and how others can engage in the process. Dill noted key product components available for the 2011 tax filing season including: (1) Split payment. Taxpayers have the option to purchase bonds on form 8888 and have the remainder of the refund direct deposited or mailed as a paper check; (2) Taxpayers can purchase bonds for themselves and bonds can now be purchased for others; and (3) The product is accessible to the unbanked, a bank account is not needed to receive the benefit. Dill detailed the IRS’ efforts to promote the purchase option through it’s established lines of communication with the paid tax preparation industry and free tax preparation sites. Early indications show that some of that outreach has been successful. In the first week of tax filing last season 168 taxpayers purchased savings bonds versus 1,760 this year.

Joanna Smith-Ramani from D2D spoke about the research done by D2D that shows the appeal of the savings bond purchase option. Tax time is a huge financial event for households and also an opportunity to create a savings behavior pattern because it occurs at the same time every year. Savings bonds encourage first time savers because a bank account is not necessary and the small denominations can be appealing to conservative savers. Smith-Ramani said a critical modification to recognize for this year is that the IRS is allowing for savings bonds to be purchased for others, a feature that will most likely encourage greater participation.   

Susan Mason, representing Intuit, the makers of TurboTax discussed Intuit’s commitment to working closely with D2D and other nonprofits and the federal government to make buying savings bonds accessible to all taxpayers and specifically promote the savings bond option.

Questions from the audience ranged from asking about the current rate of return on the savings bond to how and why to decide what vehicles are best suited for savings, including other tools such as 529 College Savings Plans.

To learn more about the Tax Time Savings Bond Campaign, please visit www.bondsmakeiteasy.org. Legislators looking to access the Tax Time Savings Bonds Toolkit provided at the event can click here. The IRS’ website also maintains useful materials, such as this outline of the process and this flier.

This briefing is hosted by the Doorways to Dreams Fund (D2D) and the New America Foundation. Additional hosts include the Cities for Financial Empowerment, Center for Financial Services Innovation, the Consumer Federation of America/America Saves, CFED (Corporation for Enterprise Development), the National Community Tax Coalition, and the National League of Cities.

Participants

Featured Speakers
Donald Dill
Internal Revenue Service

Susan Mason
Director, Corporate Affairs and the Intuit Financial Freedom Foundation

Joanna Smith-Ramani
Director of Strategy, Doorways to Dreams (D2D) Fund

Moderator
Justin King
Federal Policy Liaison, Asset Building Program
New America Foundation