01:00 AM EDT on Tuesday, June 20, 2006

BY NEIL DOWNING
Journal Staff Writer

PROVIDENCE -- Community groups, civic leaders and others gathered at the John Hope Settlement House in the city's West End yesterday to mark what they described as a watershed event:

A campaign to encourage the working poor to claim the federal earned income credit reached more than 1,600 households during the recent tax-filing season, up from about 1,100 last year.

By making free tax preparation available, especially in low-income neighborhoods, the campaign was also able to generate more than $2.1 million in federal and state income-tax refunds, up from $1.6 million last year.

The campaign's efforts wound up funneling about $1.2 million to low-income taxpayers through the earned income credit and related tax benefits, up from about $1 million last year, organizers said.

Congress established the earned income tax credit in 1975 to help offset the Social Security taxes paid by the working poor and to create a greater work incentive for low-income taxpayers. The credit, which is distributed through the federal income-tax system, has become the nation's single largest antipoverty program.

During the most recent tax-filing season, eligible low-income taxpayers nationwide were generally able to claim a credit of up to $4,400, according to a report issued earlier this year by the National Taxpayer Advocate. For this year, the maximum credit is $4,536 (The actual amount of the credit depends on the amount of the taxpayer's earned income and other factors.)

Providence Mayor David N. Cicilline said that the campaign's performance means that "millions of dollars are back in the hands of residents of our city," helping local families and the local economy.

Anthony Maione, president and chief executive officer of the United Way of Rhode Island, said that the money the campaign helped to generate for taxpayers means, in part, that some families were able to remain in their homes this winter because they knew they would have enough money to pay their heating bills.

The campaign relied mainly on the help of volunteers, who provided free tax preparation help. Those efforts saved taxpayers about $407,000 in fees they might otherwise have had to spend on paid preparers, said Internal Revenue Service spokeswoman Peggy Riley.

Those savings, as well as the money generated through the earned income credit and other tax breaks, helped put money into the pockets of hard-working Rhode Islanders, said John Symynkywicz, director of development for the John Hope Settlement House, a neighborhood-based community center. "There's a lot of people that are struggling," he said.

Of the households that took part in the campaign, 75 percent were residents of Providence, organizers said. About 60 percent of all participants resided in the six lowest-income neighborhoods of Providence and Rhode Island (including the West End, South Providence and Elmwood), Symynkywicz said.

Over the past five years, more than 4,500 households have been reached through the campaign. Over that time, the campaign has generated about $5.7 million in state and federal income tax refunds, including about $3.4 million in tax credits for participants (including the earned income credit), organizers said.

During that time, too, the campaign's tax-preparation volunteers have saved participants more than $1.1 million dollars in tax-preparation fees, organizers said.

John Hope Settlement House is the lead agency and fiscal agent for the Providence Earned Income Tax Campaign. The campaign is paid for by the United Way of Rhode Island, and the Annie E. Casey Foundation.

In Rhode Island, organizers said they hope to expand the campaign over the next year, to try to reach more low-income taxpayers who may be eligible for the federal credit. The Rhode Island General Assembly is also considering an expansion of the Rhode Island earned income credit.

ndowning@projo.com / (401) 277-7640