By Skye H. McFarlane
Lisandra Defex may be one of the few people in the city who gets excited when talking about taxes.
“I’m always getting email updates from the I.R.S.,” said the 24-year-old Defex, grinning. “A lot of times it’s just about educating them on the little things that they’re eligible for.”
They, in this case, are low- to moderate-income workers who come to Defex and her non-profit employer, Seedco, for free tax preparation. Now in its third year, Seedco’s tax preparation program offers small businesses around the city — including Lower Manhattan’s Century 21 — the opportunity to give their employees a helping hand and avoid the fees of commercial tax services.
For Century 21 workers like Djuana Copeland, free tax prep means a chunk of cash back in their pockets and a load of stress off their shoulders.
Like many retail workers, Copeland, 27, balances the challenges of motherhood (she is expecting her third child) with school and employment. She began as a cashier at Century 21 five months ago and she is finishing up her final semester at John Jay College, where she is studying criminal justice and public administration.
With all that going on, Copeland didn’t have the time or the energy to file her own taxes. “I don’t want to do all that,” Copeland said. “I’d probably give myself a headache.”
Since 2003, the Internal Revenue Service has allowed taxpayers to file their tax returns online for free, provided that they make less than $52,000 a year and do not itemize deductions. However, many filers choose not to submit their own returns out of a fear of making a mistake.
“It can be any little thing. Some people forget to put the date. Or you forget to sign it and they send it back to you,” said Century 21 general manager Susan Sullivan.
Workers often head to commercial tax preparation sites, where they pay, on average, $100 to $250 in service fees. That amount can skyrocket if the filer opts for a refund anticipation loan, commonly known as a “Rapid Refund.” Politicians and advocacy groups have long battled against Rapid Refund programs, as they are largely unregulated and often take advantage of low-wage workers.
Although the refund anticipation loans offer money in three days or less, the loans take an extra bite out of workers’ refunds. The refunds also carry the risk of converting into high-interest loans in the event that the I.R.S. returns less than the “anticipated” amount to the tax preparer. Advocates say that many workers are not aware that the I.R.S. now typically sends e-filers their return checks in eight to 16 business days.
A number of non-profits around the country have established free tax prep services. Volunteers undergo an I.R.S. training program. Defex started as a volunteer at a VITA (Volunteer Income Tax Assistance) site in the Bronx while she was a student at Fordham.
After Defex graduated in 2005, she joined Seedco, an organization best known for providing grants, loans and advice to small businesses. For most of the year, Defex works with Seedco’s clients to help connect workers with government services such as free childcare and utilities discounts. But once the new year hits, Defex and two of her fellow Seedco workers become temporary taxwomen.
Since it began offering the service in 2005, Seedco has filled a unique niche in the free tax prep world. Unlike other services, which target the residents of low-income communities, Seedco offers its tax prep through particular businesses that employ the workers. Seedco got help setting up the program from FoodChange, an organization that offers free tax services to low-wage earners directly.
Although the business-driven approach casts a smaller net, Defex said that it can be a more effective way of reaching workers. She said many workers fear that a free service will turn out to have hidden fees or risks of identity theft.
“It helps having the support of the employer,” Defex said. “Then they know I’m not just some random girl.”
To encourage additional trust and participation in the program, Century 21’s Sullivan said that the store encourages its union leaders to promote the tax prep.
As of March 27, 35 of Century 21’s 850 employees had taken advantage of the Seedco service, but both Defex and Sullivan expect that number to climb rapidly as the April 16 deadline approaches.
“I want us to double participation next year,” said Jeff Jasner, the chain’s director of stores. “We’re a family-owned business, so it’s important that we offer things like this. Some of our employees might not make a bunch of money working in the store, but they’re a part of the family and we want to keep them around.”
After years of paying $400 to $600 in fees, including Rapid Refund charges, to file her taxes at H&R Block, Copeland was eager to utilize the no-cost option. So, the East Flatbush resident made an appointment and walked a few blocks from Century 21 over to Seedco’s Lower Manhattan offices at 79 John St.
Though Defex’s tax prep office — a box-filled former storage room — was hardly glamorous, Copeland said that she was in and out within 30 minutes. More importantly, Defex explained the tax return as she was filling it out. Copeland said she never knew that she could get money back for childcare or for the interest paid on her student loans.
She has already received her refund check.
“H&R Block, they don’t tell you anything,” Copeland said. “They just tell you how much you’re getting back and how much you owe them.”
Seedco manager Karen-Michelle Mirko said that while the few hundred dollars that low-wage workers save through free tax prep might not seem like much, the money can become an extra month’s rent or a payment on a loan. Copeland said she’ll use the cash she saved to care for her children.
