Under current tax laws, low income workers are eligible for the Earned Income Tax Credit (EITC), which can be claimed even on the simplified 1040EZ form. This extra money helps many families get repairs on their car or replace a broken-down appliance, which they couldn't afford otherwise. Others use it to catch up on overdue bills. 

However, many people are confused by the needlessly complex language of the instructions for filling out the forms, or intimidated by the math. The neighborhoods where the most low-income people live also happen to be the neighborhoods where the schools are poorest, so some residents didn't get the skills they need while they were in school. Thus, they seek help to prepare their tax returns. 

The largest of these tax preparers are H&R Block and Jackson Hewitt, which together account for about one of every six tax returns prepared with help and filed electronically. There are hundreds of smaller ones, according to a report by the Brookings Institution, a Washington think tank. 

Tax preparers pressure clients into taking out these RALs to get their money faster. If they don't have the $200 or so to pay the fees up front, they may be given no choice. According to a report by the National Consumer Law Center and Consumer Federation of America, low-income families nationwide paid a total of $810 million in interest on these loans in 2000, just to get their own money a few days sooner. In 2001, the figure rose to $907 million. Adding electronic filing fees, document preparation fees and loan application fees, the 2001 total came to $1.8 billion. 

When these fees and the interest charged on these loans is calculated out to an annual percentage rate (APR), the average is an outrageous 222.5%, ranging from 97.4% to over 2,000%, said the report. The truth is, if you file your tax returns electronically (by computer) and have your refund deposited directly in a bank account, you can get the refund in less than a week. Sadly, most of the neediest people have access to neither a computer nor a bank account. There are places where you can get help for free. I'll have a list of these VITA (Volunteer Income Tax Assistance) sites for you next month. ACORN (Association of Community Organizations for Reform Now) is conducting a campaign against these loan sharking practices. To get involved, call them at 412/441-6551. 

Perhaps we in Hazelwood can do something about this by working together. If enough readers call the Hazelwood Initiative office at 412/421-7234, maybe we could have a get-together where we have someone come and explain the forms to us. It will only happen if you pick up the phone and make that call. If you do use a commercial tax preparer, JUST SAY NO when they suggest an "instant refund". Like drugs, they cost you a lot of money and do you little or no good.