As Tax Day Approaches, Thousands of Working Families Await Action on Their 2011 and 2012 Filings

April 10th, 2014  |  by  |  Published in Budget and Tax Policy, NJPP Blog: As a Matter of Fact ...

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By David Rousseau and Jon Whiten

As April 15 inches closer and a half-million low-income working New Jerseyans await the economic boost of the Earned Income Tax Credit (EITC), nearly 200,000 filers from the previous two years continue to wait for almost $100 million in unpaid credits from this essential anti-poverty program.

NJPP has been closely tracking the state’s fraud investigation that has left many of New Jersey’s lowest-earning workers in the lurch. New data provided to us after an open-records request show that the state has made little progress in clearing the logjam. For the families affected, the delay can have dire effects.

In about six months, New Jersey was able to reduce 2011’s pending EITC claims by 1,674, but 89,268 claims – 87 percent of those set aside – remain in limbo after two years. That equals $45.7 million in much-needed tax relief that these folks expected two years ago. In the same time, the state made more progress reducing 2012’s pending EITC claims: Those dropped by 11,163, leaving 89,001 pending claims totaling $52.7 million in credits.

New Jersey families who receive the EITC are already suffering under what will soon be a fifth year of tax increases from the 2010 benefit reduction. If the EITC is not restored in the 2015 budget, about a half-million New Jersey families will have lost between $250 and $300 million in crucial tax credits that help them get a leg up in high-cost New Jersey. Some of the poorest families have lost $331 a year, totaling $1,650 over five years.

The continued delays in prior year credits add insult to injury for these families. It is disappointing that no members of the Senate and Assembly budget committees pressed the state treasurer to explain the delayed processing of about one of five EITC filings. Recent reports document that the EITC procedures are bewilderingly complex and that uncertified and exploitative tax preparers are taking advantage of unsophisticated taxpayers. If so, this is a problem that may require more urgent action by both the administration and legislature.

EITC logjam-01


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