Since advocates helped ensure the historic passage of a modern, progressive Working Families Tax Credit (WFTC) in 2021, much work has been going on behind the scenes to prepare for its launch in 2023. The WFTC will provide a direct cash boost of $300 to $1,200 per year for nearly one in six households in Washington state, helping people to pay for basic needs, such as groceries, car payments, and school supplies. Critically, people who file their taxes using Individual Tax Identification Numbers (ITINs) are eligible for this cash support.
The success of the WFTC hinges on its ability to effectively reach communities and make sure everyone who qualifies for the credit receives it. One in five households eligible for the Earned Income Tax Credit, the federal anti-poverty program that the WFTC is modeled after, miss out on this tax credit due to confusing eligibility requirements and other barriers to access.
Other states that have implemented this kind of program are clear that while outreach is important, outreach alone does not increase the amount of eligible people who receive their tax credits. A key marker of success for a program like this is a simple, streamlined application that does not burden low-income individuals and families with confusing and difficult to fulfill administrative requirements.
However, the Washington State Department of Revenue (DOR), the state agency that is implementing the credit, has proposed several requirements in their draft rule which could act as barriers to access for our lowest income neighbors, including people who live in unstable housing situations or are unhoused, survivors of domestic violence, immigrant communities, and people who live in rural areas.
The draft rule is the proposed administrative policy which outlines how a state agency will implement legislation; in this case, DOR’s draft rule outlines administrative requirements which will impact how people apply for the WFTC, and what kind of documents they have to submit. Advocates have until July 5th 2022 to submit comment on the draft rule.
Fortunately, there are easy changes that will ensure people are able to access this lifesaving cash boost. At the public hearing on the Working Families Tax Credit draft rule, members of the Working Families Tax Credit Coalition shared powerful testimony with DOR. Below is a summary of the changes advocates are asking for and the impact these changes will have on the communities they serve.
Allow people to apply for their cash payment for up to three years.
The proposed guidelines limit the time when people can apply for the WFTC to Dec 31st of the year in which they were eligible – meaning that people won’t be able to apply for past years if they miss the deadline. In contrast, the IRS allows people three years to claim refunds they previously have not claimed.
→What advocates have to say:
“We are really concerned that this will lock out eligible people from rightfully receiving the credit. It’s going to be a heavy lift messaging-wise to get the word out to communities, and to get it out in culturally responsive and linguistically appropriate ways. In all reality, it will likely take a year or two to really build public awareness and trust.” – Christina Wong, Northwest Harvest
Get rid of burdensome documentation requirements for ITIN filers that could result in the denial of their application.
Immigrant communities face misinformation and fear around government processes and sharing of information, and adding extra barriers for ITIN filers will make it even harder for them to access this credit. Currently, the Department of Revenue plans to deny an ITIN filer’s WFTC application if the applicant does not provide proof that they received a valid ITIN by December 31. This will be difficult or impossible for members of our community who use ITINs to file their taxes, due to IRS processing delays.
→What advocates have to say:
“The IRS is facing a huge backlog of processing ITIN applications, and folks who have ITINs are really facing an urgency in the need for cash assistance. For example, a lot of undocumented workers were laid off during the COVID-19 public emergency orders with no access to social safety nets like unemployment benefits and federal relief. We have to make sure that ITIN filers are not denied life-saving cash because of processing delays.” – Alizeh Bhojani, OneAmerica
Get rid of the punitive requirement for people to pay back overpayments with interest, due to honest mistakes.
The low-income individuals and families who are eligible for the WFTC will rely on this cash payment to meet their basic needs. The proposed draft rule requires applicants to repay any WFTC refunds that were overpaid due to an error (either on their part, or on DOR’s) with interest accruing after 6 months. When considering other similar programs, the majority of mis-claims happen due to honest mistakes and the complexity of the application. Punishing people for mistakes could push people further into poverty.
→What advocates have to say:
“People need access to cash, not fear of debt, especially if they are making a mistake.” – Marcy Bowers, Statewide Poverty Action Network
“We have had numerous caregivers testify during this previous legislative session that the Working Families Tax Credit will help them keep their car in good condition or afford other necessities that allow them to continue to serve the families and older adults that depend on the care they provide. Punishing caregivers for a mistake on their application defeats the purpose of this credit and does not align with our values of economic and racial justice.” – Diana Salazar, SEIU 775
Accept self-attestation as proof of residency.
In order to prove residency in Washington state, DOR currently requires applicants to list physical addresses they lived in for the year they are claiming the credit. This is stricter than the IRS requirements for the federal EITC, and requiring this additional information will be a barrier for many applicants including those experiencing homelessness, living in informal housing situations, and those experiencing domestic violence.
→What advocates have to say:
“Oftentimes survivors are fleeing. Their lives are in chaos. They don’t necessarily have the types of documentation that would verify where they’re living. Similarly for survivors, it can be really unsafe to have their address information in large databases, where a lot of different people can access that information. Or even if it is safe, they are hesitant to submit that kind of information and may forego this life saving benefit.” – Traci Underwood, Washington State Coalition Against Domestic Violence
Streamline the application process by not requiring applicants to provide information already found on the required federal tax return.
The current draft rule and application requires applicants to submit a significant amount of documentation, including information that is already found on the federal tax return that is required of all applicants. The Department of Revenue should use the information they already have, and eliminate burdensome documentation requirements for applicants.
→What advocates have to say:
“There are two things I’ve seen that really hinder families’ ability to navigate programs. One, a high burden of documentation needs that require an enormous amount of labor and time on their part, and a fear that if they do not put in exactly the right information – such as the exact dates they were at certain residences, as the current draft application would require, that they would somehow incur some sort of legal trouble fee or penalty, and those are risks that they cannot take on.” – Maggie Humphreys, MomsRising
Eliminating these barriers will ensure meaningful access for our low-income neighbors and community members, and is critical to make the launch of the WFTC as successful as possible. The Department of Revenue is accepting public comment until July 5, 2022.
“The greatest measure of success of this historic program will be the credit’s ability to reach and support the communities that stand to benefit the most. Eliminating and reducing the barriers outlined above will be critical in achieving this goal.” – Christina Wong, Northwest Harvest