Late Wednesday night, the Senate reached a final agreement on the Coronavirus Aid, Relief, and Economic Security (CARES) Act. After weeks of debate and amendments, the bill addresses the most immediate economic needs of families affected most by the pandemic. It provides a one-time recovery rebate check; expanded unemployment benefits; relief for small businesses and nonprofits; and relief for state, local and tribal governments. The CARES Act is a critical first step in addressing the financial hardship of low-income families. However, there is much more that should be done to provide support to impacted workers and their families. Other gaps within the bill include: access to safety net benefits, increased funding for the Volunteer Income Tax Assistance (VITA) Program based on heightened demand, and to access to capital for vulnerable communities through Community Development Financial Institutions (CDFIs).
As of this post, the House has not yet voted on the CARES Act. But in the meantime, here are three things that you should know about the legislation as it stands:
Low- and moderate-income families are going to need free tax preparation services more than ever before in order to receive recovery rebates. Unfortunately, the legislation does not explicitly increase VITA funding.
With the CARES Act, one-time checks to all adults will be sent in the amounts of $1,200 for single filers, and $2,400 for joint filers. This will include an additional $500 for every child (defined as under 17) in qualifying households. These recovery rebates will be based on 2019 tax returns. If a household or taxpayer hasn’t filed a 2019 tax return yet, the IRS will use their 2018 return. If neither a 2019 or 2018 return has been filed, or if there is no filing requirement, the IRS may use a 2019 Social Security statement showing income. In addition, thanks to the advocacy and phone calls of many within the Taxpayer Opportunity Network (TON), the tax filing deadline has also been extended from April 15 to July 15—adding time for folks to do their taxes.
With that in mind, we know that this will lead to a surge in demand for the VITA program once sites resume regular operations. We also know that VITA sites plan their work, and their grants, to align with the standard tax filing period. Given the three-month extension, and a projected increase of low- and moderate-income tax filers, the VITA program will need supplemental funding to ensure that sites have enough resources for expanded service delivery.
Asset limits, also known as savings penalties, will continue to influence low- and moderate-income households’ ability to receive public benefits such as Temporary Assistance to Needy Families (TANF), Low Income Home Energy Assistance Program (LIHEAP), and Supplemental Nutritional Assistance Program (SNAP).
As a rapidly increasing number of American families are experiencing health and economic affects of the COVID-19 crisis, we want to ensure that our most financially vulnerable families can readily access benefits from public assistance programs. Signed by 35 partners, we sent a letter to Congress last week requesting that the ASSET Act be included in emergency legislation. Asset limits don’t apply to stimulus payments because they are technically “refunds.” However, we know that as this crisis threatens to persist, food and financial insecurity will become an increasing challenge for low-income families. These families – particularly those whose primary earners are hourly workers, or employed within the temporarily halted service industry– will be increasingly unable to cover the cost of food and other household expenses.
Now is not the time to force families into further economic uncertainty. We are asking Congress to make SNAP, LIHEAP, TANF and Supplemental Security Income (SSI) readily available to families by including the ASSET Act in emergency coronavirus-related legislation. This could protect families from economic ruin in a time of crisis, particularly the 37 percent of American households already living just one lost paycheck away from financial ruin.
Though CDFIs are on the frontlines to support the low-income families and households of color that are the most negatively affected by these crises, they did not receive the emergency funding they need.
CDFI’s have a demonstrated track record of providing financial services, such as affordable credit, long-term capital, counseling to distressed borrowers, and banking services to communities and households that mainstream financial institutions cannot or will not serve. Because of their localized focus, they are also uniquely positioned to understand the economic and social conditions of their communities. Moreover, CDFI’s operate in all 50 states and have played a vital role in helping underserved communities during other national emergencies, including the 2008 recession and deadly Hurricanes Katrina and Sandy.
Even when the economy is stable, low- and moderate-income families that CDFIs serve live paycheck-to-paycheck and are one medical bill or fender bender away from a financial crisis. Without action, many of these households will end up in a crushing cycle of debt that will drain finances and be extremely difficult to overcome. Increased emergency funding for CDFIs, especially in our current environment, is greatly needed. Though CDFIs did not get additional funding in the third phase of the COVID-19 legislation, Prosperity Now is joining our partners at Hope Enterprise Corporation, Opportunity Finance Network, and Inclusiv in urging Congress to provide $1 billion in emergency funding to the CDFI Fund in the next round of the stimulus package.
The COVID-19 pandemic has exposed what we’ve always known and fought hard to address as a critical part of Prosperity Now’s mission: many American families are one crisis away from total financial ruin. As attention shifts to the House’s companion bill and a final signature from the President, we’ll continue updating our Community on how provisions within the stimulus package will be implemented, and how you can influence a potential fourth economic stimulus bill. To stay up-to-date, please join our advocacy campaigns, check out our COVID-19 resource page, and join one of our networks.
Originally posted by Prosperity Now on 2020-03-26 19:00:00