What can the White House do

to have Real Economic Impact

for Americans with Disabilities?

June 15, 2009

Prepared by:

Michael Morris, J.D.

Executive Director, National Disability Institute

CEO, Burton Blatt Institute at Syracuse University

Johnette Hartnett, Ed.D.

Director of Research

and Strategic Partnerships

National Disability Institute


  1. Introduction

In this unprecedented period of economic downturn with a record number of housing foreclosures, millions of working age adults dislocated from employment, and new levels of individual and business bankruptcy filings, President Obama has been successfully moving forward to stabilize our financial institutions and markets, stimulate the economy with new government funding, and create jobs to help lift families from poverty to the middle class. Will these current initiatives impact people with disabilities?

One in five adults living in the US have a disability and over 22 million families nationwide have a member with a disability. Disability cuts across race, gender, ethnicity, age and geography. Whether occurring at birth or acquired later in life, individuals with disabilities are three times more likely than their non-disabled peers to live at or below the poverty line, twice as likely to be unemployed and seven times more likely to have a majority of their total income to be from public assistance sources.

No group in America is more in need and more deserving of economic recovery.

In these unique times, the White House and President Obama’s senior leadership can adopt a targeted policy agenda and a short list of high profile and high impact initiatives that produce real economic impact for individuals with disabilities and their families.

  1. Expand targeted outreach and volunteer income tax return assistance (VITA) for low income workers with disabilities to access the Earned Income Tax Credit (EITC) in coordination with the IRS SPEC and public-private partnerships in over 100 communities nationwide. Create a Disability Tax Aid program that replicates the Senior Tax Aid program to provide free tax assistance ($6 million) for working-age individuals with disabilities (22 million) under the age of 65. Expand the VITA matching grant program from current funding of $8 million to $12 million with assurance that national intermediaries that are assisting existing coalitions to build capacity to serve persons with disabilities but not actually doing tax preparation are allowed to participate. (See Appendix A for more details)
  1. Support Emerging Legislative Initiatives that seek to Promote Asset Development & Economic Self-Sufficiency among Individuals with Disabilities.

(a)Achieving a Better Life Experience Act (ABLE) to help individuals with disabilities and their families cover gateway costs and plan for a better economic future.

(b)Savings for Working Families Act to dramatically expand the opportunity for low-income people with and without disability to open individual development accounts and gain financial literacy and realize specific asset goals.(See Appendix B for more details)

  1. Send to Congress a legislative package to reform asset limits that determine continued eligibility for public benefits to encourage income production and savings for people with disabilities.
  • Grant states flexibility to adjust the asset test. Because SSI asset limits are set by the federal government, Congress has the ability to reform the guidelines of SSI asset tests. For SSI, Congress could give states the flexibility to set or eliminate the asset test as they can do now in the Medicaid, S-CHIP and TANF programs.
  • Raise the asset limit. By increasing the asset limit for SSI and Medicaid to a more reasonable level, families are at least allowed to build and maintain a modest pool of savings for retirement, education, or unexpected expenses.
  • Raise the substantial gainful activity (SGA) under SSI and SSDI. By raising the SGA level, individuals with disabilities would no longer suppress income production, sometimes called the “cash cliff” in order to stay on benefits. With SGA at a higher level and a gradual reduction of benefits for people on SSDI as they make greater income, the impact would be that individuals with disabilities would be encouraged to work, save and build assets.
  • Index the asset limit to inflation. Indexing the asset limit to inflation allows the limit to grow over time with the economy. If SSI asset limits had been indexed to inflation and adjusted the same way benefit levels have been since the last asset limit increase in 1989, the asset test would have been $3,657 for an individual and $5,486 for a couple in 2009. In 2008, Congress indexed SNAP (Supplemental Nutrition Assistance Program; previously—Food Stamps) asset limits. Although a modest improvement, it is important to note that the existence of an asset limit still sends the signal to program applicants and participants to not save.
  • Exempt categories of assets. Additionally, certain categories of assets such as tax-preferred retirement accounts and education savings accounts could be exempted from counting toward an asset limit. Congress exempted IRAs, 529s and Coverdells from SNAP asset tests in 2008. This should continue in future years, and also be expanded to include 401(k)s. Additionally, the asset limit should be increased for ongoing SSI eligibility when someone is earning income.
  • Create “categorical eligibility” for certain assets. Since 1999, 12 states have essentially eliminated SNAP asset limits through “categorical eligibility.” This enables individuals to automatically qualify for a public benefit program based on eligibility for another, thus expanding the availability of public benefits for needy families and reducing administrative burdens.
  • Allow SSI recipients to set aside funds for future expenses related to their disability. Persons with disabilities face unique challenges and needs that cannot be provided for with current tax-preferred savings plans. Facilitating saving for these purposes can aid individuals with disabilities in building assets for the future and achieving financial self-reliance.(See Appendix C for more details)
  1. Support Amendments to S.1229 – Job Creation Through Entrepreneurship Act of 2009 to improve support of current and would be business owners with disabilities through existing SBA programs and activities. In record numbers, individuals with disabilities are turning to self-employment to advance their economic status. These Amendments would a) create a new lead position at the SBA to advocate internally on behalf of the need and interests of persons with disabilities and b) add small business owners with disabilities to the list of groups with 8A status who would benefit from federal procurement set asides. (See Appendix H for more details).
  1. Create by Executive Order a cross-agency time-limited Commission to identify barriers and promote solutions to advance the economic self-sufficiency of individuals with disabilities and their families. (See Appendix D for a draft.)
  1. Host a national Asset Development Forum that is led by the private sector and champions the rights of all underserved markets, including low income, disability, Native American, English as a second language, elderly and people living in rural areas. (See Appendix E for more details)
  2. Create an Economic Stimulus Disability Advisory Council comprised of representatives of multiple federal agencies to meet regularly to evaluate progress and any delays in implementing key provisions of the ARRA that directly impact individuals with disabilities. (See Appendix F for more details)
  3. Support in a re-authorization of the Workforce Investment Act mandated financial education services that bring financial literacy and free tax assistance to every One-Stop Career Center in coordination with the IRS SPEC and the FDIC. (See Appendix G for more details)

APPENDIX A – Access to the Earned Income Tax Credit

Policy Background

The complexity of federal tax regulations requires many low-income individuals to pay for assistance of costly private tax return preparation entities or refund anticipation services, thus leaving many with no other option that to avoid the federal income tax filing process altogether and forgo any tax credits for which they are eligible. The availability of free tax education & assistance programs in local communities ensures more realistic options for underserved populations to successfully file their annual federal income tax returns and increases tax compliance among low-income Americans. For example, VITA sites offer free tax assistance to low-to-moderate income individuals who cannot afford professional assistance and are considered a gateway for special needs populations to learn about financial literacy & asset development and access other essential services and supports offered in the community. More than 75,000 VITA volunteers prepare basic tax returns for low income taxpayers with a focus on at least one specific underserved group with special needs, including persons with disabilities, non-English speaking persons, Native Americans, rural taxpayers, and the elderly.

The Community Volunteer Income Tax Assistance (VITA) Matching Grant Program is one of three federally-supported taxpayer education & assistance programs funded through the Internal Revenue Service, and was initiated via a joint explanatory statement accompanying the FY 2008 Financial Services & General Government Appropriations Act enacted on 26 December 2007 (P.L. 110-161). In this statement, both the House and Senate Appropriations Committees directed the Internal Revenue Service (IRS), in collaboration with the National Taxpayer Advocate Service, to submit a proposed design for a new matching grant component for the Community Volunteer Income Tax Assistance (VITA) program. The matching grant program is intended to provide direct funds to enable VITA programs to extend services to underserved populations and hardest-to-reach areas, both urban & non-urban, as well as to increase the capacity to file returns electronically, heighten quality control, enhance training of volunteers, and significantly improve the accuracy rate of returns prepared by VITA sites. The program was funded in FY 2008 at an initial $8 million, and additional resources were provided to expand the program via the FY 2009 Omnibus Appropriations Act and the American Recovery & Revitalization Act of 2009.

Prior IRS Wage and Investment Division research has identified persons with disabilities as a major underserved market segment in terms of receiving support from national low-income tax assistance programs, asset building coalitions and the private sector financial services. For this reason, the House & Senate Appropriations Committees specifically identified people with disabilities as one of the six primary populations to be targeted in the Community VITA matching grant program. Unfortunately, in 2008, only 3 of the 121 VITA matching grants awarded focus specifically on people with disabilities as the grant’s primary target population (and only 12 list people with disabilities as a secondary focus). Thus, it is imperative that in addition to advocating for significant increases in the program so that more VITA sites receive federal support, it is also imperative to stress the importance of an increased emphasis in supporting sites that are specifically targeting their outreach efforts to people with disabilities. Senior Tax Aid specifically targets people who are over 65 years old and has had great success. A Disability Tax Aid program could have similar success accessing EITC for persons with disabilities.

Policy Recommendation

The objective of this policy goal is to ensure that low-income individuals living with disabilities achieve parity with regards to accessing free tax assistance & support equal to that which is available to other special needs populations targeted by federally-funded programs. To achieve this, two actions must be taken. First, the overall annual funding for the Community VITA Matching Grant Program must be increased. This year, a coalition of national community-building non profit organizations have urged Congress to increase the annual funding for this important program from $8 million to $12 million. Second, clear report language must be included in the final appropriations legislation that directs the Internal Revenue Service to ensure that a reasonable proportion of resources allocated to the VITA program be dispersed to VITA sites and entities who are promoting demonstrated services for taxpayers with disabilities.

President Obama should adopt the Real Economic Impact Tour as an innovative public-private sector initiative helping people with disabilities be a part of the economic recovery.

Expand the Real Economic Impact Tour in partnership with the IRS & VITA program to reach an additional 1.1 million workers with disabilities who are eligible but not yet claiming the credit.

Policy Background

The IRS/SPEC Disability Initiative educates working taxpayers with disabilities on available tax credits, deductions, and free tax help. It also increases their understanding of and access to community-based asset-building and financial literacy resources to help improve their economic well-being. IRS/SPEC collaborates fully with the National Disability Institute (NDI) through their Real Economic Impact campaign. The Real Economic Impact is a national initiative delivering financial education and tax preparation services to low-income persons with disabilities in 100 U.S. cities on 2009-2010.

The REI Tour is a public-private collaboration spearheaded by the National Disability Institute and designed to provide Americans with disabilities insight, tools and resources to improve their lives through financial education, training and counseling. Since its inception in 2005, the REI Tour has increased free tax assistance to 331,751 taxpayers with disabilities with tax refunds of $296.7 million through an array of new partnerships that are building trusted social and business networks. The REI Tour has grown from 11 cities in 2005 to 100 cities in 2010. Corporate sponsors include Bank of America, AT&T, Wal-Mart, Darden Restaurants (Red Lobsters, Oliver Garden) and Acorda Therapeutics).

The REI Tour is designed to promote:

  • the real economic impact of persons with disabilities, by increasing the number of tax filers with disabilities and use of tax credits and deductions;
  • the development of local partnership network between persons with disabilities and their families; disability and community-based organizations, and companies that sponsor the REI Tour; and
  • measurable economic growth in participating cities.

This ground-breaking effort has been the gateway for many to explore opportunities connecting them to financial independence. This is accomplished through community partnerships in cities throughout the country linking consumers to non-profit organizations, federal agencies and private-sector companies.

Activities in each city include:

  • Volunteer tax preparation assistance
  • Financial education classes
  • Training about access and use of public benefits
  • Special events to connect to financial institutions
  • Credit, debt, and homeownership counseling
  • Audio conference series to all stakeholders on issues regarding accessible sites, tax provisions and credits, public benefits and much more
  • Training about federal work incentives to promote self-sufficiency

Significant Accomplishments of the REI Tour cities in 2008 included:

  • 150% increase in number of free tax returns prepared for persons with disabilities from 2007 to 90,653.
  • Increased refunds to taxpayers with disabilities from $32.6 million in 2007 to $81.5 million in 2008.
  • Over 2,016,165 outreach contacts in asset building education and media information completed.
  • Increase in the number of local partners by 56% from 355 in 2007 to 555 in 2008.

For the 2009 results (Tax Year 2008 filed by April 15, 2009) the early returns indicate that over 180,000 persons with disabilities were assisted with free tax return assistance representing a 100% increase from the 2007-2008 tax filing season.

Policy Recommendation

Encourage and elevate support for the current partnership between the IRS SPEC division and the Real Economic Impact Tour. President Obama holds a press conference with the IRS, FDIC and corporate sponsors to express his support of the REI Tour and the call for funding of a Disability Tax Aid program to reach an additional 1.1 – 1.3 million workers with disabilities who are not filing a tax return and could be missing out on a number of available credits. It is estimated that $1 billion in EITC is going unclaimed for persons with disabilities.

Appendix B – Legislative Initiatives to Promote Asset Development and Economic Self-Sufficiency

  1. Achieve A Better Life Experience Ace (ABLE)
  2. Savings for Working Families Act

Policy Background

Many families have been searching for a way to plan for the future of a child with severe disabilities. While they are able to save for the educational needs of their other children through “529” college tuition plans, they find that those plans do not fit the needs of their child with severe disabilities. Since their children may now, or as adults may be likely to, need the long term services and supports of the Medicaid program and the income assistance of the Supplemental Security Income (SSI) program, many have considered using the existing options for supplemental needs planning in the Medicaid program. However, often families have found it to be too expensive to hire an attorney to establish a trust which meets the requirements of the Medicaid and SSI programs. These families recognize that their loved ones may live for many decades beyond the ability of the parents or other family members to assist them through supplementing services they receive through Medicaid. Others want to ensure the financial security of family members who have the level of disability required for Medicaid eligibility, but for now, are managing to function without the use of those benefits. Still others want to ensure that their family member can exercise control over the funds in the account without endangering the Medicaid and SSI benefits on which they may rely.

The ABLE Actwould give individuals with disabilities and/or their families access to savings accounts that would allow individual choice and control while protecting eligibility for Medicaid, SSI, and other important federal benefits for people with disabilities. They could create a disability savings account that would accrue interest tax-free. Withdrawals would not be taxed as long as they are used to pay for qualified expenses. The account could fund a variety of essential expenses for the person with a disability, including educational expenses; medical and dental care; health, prevention, and wellness expenditures; employment training and support; assistive technology; personal supports services; transportation; housing; and other expenses for life necessities.