Thursday, February 22, 2024

SECU - Consider This: Chapter 21 - Tax Prep, "We" Know Best? "WE" ... curiouser and curiouser!

In keeping with its "WE are SECU" approach to leadership, the SECU Board in 2022 dropped tax preparation services - without review or discussion with the SECU membership .

When challenged about the decision "the We Board" said tax prep was an unnecessary distraction and only served such a "tiny segment of our membership" - "in 2022, fewer than 2% of our members used the program". When asked by staff what to tell members, the answer was: "Although our staff diligently and competently prepared tax returns, "we've" come to believe that members are best served... by someone else."

Tax prep was a "unicorn service" at SECU. The Credit Union became involved in tax prep because less affluent taxpayers - including many SECU members - were getting ripped-off by a service then known as a "Tax Refund Anticipation Loan", which often unfairly grabbed from 10%, up to 25% of the taxpayer's tax refund - (much like RBL that lending practice was "legal" at the time!).

The Volunteer Income Tax Assistance/ Tax Counseling for the Elderly (VITA/TCE) program was IRS sponsored and aimed at helping assure folks were treated fairly. SECU started participating @ 2012. That "tiny segment" of SECU members served had exceeded 100,000+, pre-pandemic. Along with AARP, SECU had become the largest volunteer tax prep service in the U.S. The VITA program was limited to folks earning < than $60,000 and accepted only simple 1040 returns. SECU was not attempting to displace CPA tax experts, nor to become H&R Block! IRS provided the training, software and support at no cost - plus a hard dollar cash grant. Can't think of a much better mentor on taxes than the IRS, can you?

Tax prep was a difficult service to offer, because of the time crunch which was from @ February 1 to April 15 - lots of pressure to perform. The program had some exceptional SECU leadership, however, and innovative ideas for improving and better managing the tax prep service occurred every year. Every interested employee was given the opportunity to be trained and certified by the IRS in tax prep. Those who earned and maintained the designation received salary increases. 

Much like the SECU Salary Advance Loan [see Chapter 13], process improvements, automation, and workflow enhancements were working. Tax prep was a "drop off" service which simply meant that the Credit Union could chose when and where to process the tax return; routine branch duties did not have to be interrupted. Returns were usually completed within a week. Originally, a service provided without charge, a fee of $95 was later added. Not hard to compute the revenue side of the program is it; 100,000+ returns at @$95 each = @$10 million.

But the "unicorn economic impact" of the tax prep program for the SECU membership and North Carolina was far greater than $10 million. Far greater! For example, the "average cost " to have a simple 1040 tax return prepared in the marketplace is @ $240 (check it out for yourself!). So, if each of those 100,000+ members saved $145 in tax prep fees ($240-$95 =$145), then that left $14.5 million in their pockets for such luxuries as food, shelter and clothing.  

But there is more! Lower income working men and women in N.C. qualify for several special tax deductions and credits such as the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC). These credits can only be claimed if a tax return is filed. The average tax credit is @$2,476 but can go as high as $7,500 or more. 

  But, over 1 in 5 of eligible N.C. citizens don't apply for these credits, leaving over $450 million unclaimed "on the table". UNC-CH has done a lot of work in this area [here take a look]. What if SECU could help help inject $450 million into the North Carolina economy - especially rural N.C.? Or, put an additional $2,476 in the pockets of an SECU member or $7,500 in the pockets of a N.C. family of four - by simply getting paid $10 million to help them file their taxes?

  Would helping our members in this major way be worth a little trouble? Could we get together, figure it out, and make it work?  

Or are we too busy to be bothered by the members? 

Choices need to be made... your future depends on it!

.... "We are SECU"**?... or "Unicorn"! 

** "industry standard"- idiom, n., definition: to be neither better nor worse, middle-ish, average, halfway between good and bad, "C-paper"; for synonym see: mediocre. Often used as a substitute for original thought in strategic plans.