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Report Shows MA Taxpayers Losing Millions at Tax Time

April 3, 2008

Boston, MA - Tax time is a "season of giving" in Massachusetts – and not just to the Internal Revenue Service. A new report says Massachusetts' poorest families are wasting millions of dollars when they file their income tax returns.

The Children's Defense Fund (CDF) report shows most Massachusetts taxpayers who earn little enough to file for the Earned Income Tax Credit (EITC) are paying for tax preparation services that are available for free. They're also falling victim to "instant refund" offers that are, in fact, high-interest loans. The CDF's Ed Shelleby says money is being wasted, when it could be helping families pay for such necessities as rent, food and utilities.

"In Massachusetts, lower-income families lost more than $35 million to commercial tax preparers because of these 'Refund Anticipation Loans,' money that doesn't need to be going to these predatory lenders and should be going into the families pockets who deserve it."

The average EITC filer loses hundreds of dollars to these loans each year, Shelleby explains, although more than 300,000 Massachusetts taxpayers are eligible for free tax preparation services through the Volunteer Income Tax Assistance (VITA) program. VITA offers tax-filing services in places like local libraries, schools and community centers.

"It helps cut down on the confusion of the process. It's done by a trained staff people who know how to make certain that families get the most out of their refund. It's a great service that will ensure you get back every dollar you've earned."

Anyone who makes under $40,000 a year can take advantage of the service. Fee-based filing companies argue that the "instant refund" loans help taxpayers receive their money more quickly than waiting for their tax returns to be processed by the Internal Revenue Service.

To view the complete CDF report, which includes a breakdown by state of money "lost" to paid pax preparation services and predatory lenders, visit

Kevin Clay, Public News Service - MA