Professionals_research

This report summarizes the results of an employer survey conducted by the UNH Cooperative Extension’s Family Resource Management Program in the Spring of 2006. The survey was an outgrowth of previous research conducted as part of a statewide project assessing the needs of low and moderate income workers in New Hampshire. Focus groups conducted in the Spring of 2004 revealed that lack of knowledge could be a significant barrier to those in financial need. The low participation in the EITC (Earned Income Tax Credit) and AEITC (Advance Earned Income Tax Credit) could be partially explained by lack of clear information and instruction, as well as availability of free tax preparation sites. A follow-up survey of EITC eligibles in the Spring of 2005 corroborated the critical need for information and tax preparation assistance. The present survey of New Hampshire employers was conducted to determine how the Cooperative Extension could work more closely with businesses to increase EITC/AEITC participation among eligible New Hampshire residents.

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Methods and Sample

A multi-stage cluster sampling design was used to construct a representative sample of businesses/services throughout the state. Based on the latest labor force statistics for New Hampshire, job categories most likely to have large percentages of employees earning $35,000 or less were manufacturing and a variety of service sector jobs, including health care, day care, and jobs in retail and tourism. The population was constructed from published lists of manufacturing firms, hospitals, nursing homes, assisted living facilities, day care centers, resorts, and conference centers in New Hampshire. After dividing the state into counties, the percentage of firms in each category was determined by population in each of the metropolitan, non-metropolitan, and rural counties. About 60% of the sample was drawn from metro counties, 20% from non-metro, and 20% from rural. The sample was generated by selecting every other firm on the lists with a target number of 300: 180 from metropolitan counties, 60 from non-metropolitan, and 60 from rural. Twenty-nine percent (29%) of employers were in manufacturing and 71% in services. Types of firms varied by county because there are more service jobs, such as tourism and/or retail, and less manufacturing in rural areas.

A survey was mailed to selected employers with a letter explaining the research and providing information on EITC/AEITC in New Hampshire. Surveys were sent out in April of 2006, with a follow-up in late May. The survey asked employers about AEITC participation among their employees, whether they provide tax credit information to workers, and if not, whether they would be interested in doing so. Employers were also asked if they would like to receive and distribute information on free tax preparation sites. Questions were also asked about ways that such information could be disseminated and how employers felt about hosting a free tax preparation site on the premises, posting information in the workplace, and allowing time for workers to complete tax preparation off site. Survey results will be shared with respondents.

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Findings

Of the 301 mailed surveys, 56 were returned, a response rate of 19%. The distribution by county, region, and type of business approximated that of the original sample. Fifty-seven percent (57%) were from metropolitan counties, 23% from non-metropolitan, and 20% from rural counties. The types of business/services included manufacturing (27%), nursing homes/assisted living facilities (36%), daycare centers (18%), hospitals (7%), conference facilities/hotels/resorts (5%), retail businesses (4%), and other for-profit businesses (3%). The size of businesses varied, with the number of employees ranging from 8 to 4,700. Twenty-nine percent (29%) had fewer than 50 employees; 30% had 51 to 250 employees, 21% employed 251 to 500 people, and 20% employed more than 500.

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EITC/AEITC:

The companies together employ 21,487 people. While 39% of these employees earned less than $35,000 per year, only 5% of employees received AEITC in their paychecks. Sixteen percent (16%) of employers provide EITC information to their employees. Of those who do not, 85% said that they would be interested in receiving information to distribute to their employees. Only 13% of employers provided AEITC information. Of those who do not, 92% said they would like to receive and distribute information. Eighty-two percent (82%) of respondents said they would be willing to insert an EITC/AEITC flyer in employee paychecks.

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Free Tax Preparation Sites:

Half (52%) of the employers said they would be willing to host a free tax preparation site at their business for employees. Of those who responded no, however, over ¾ (78%) said that they would be willing to post information about free tax preparation sites in their communities or place of business. Also, 82% of those responding said that they would be willing to insert information on IRS certified tax preparation sites with W-2s.

Most employers (63%) would not be willing to give an EITC eligible employee time during the work day to get their taxes prepared at a free tax preparation site. Of those who said yes, about 30% would allow an employee paid time for this, but the numbers were very small. Only 13 said “yes” and 4 of the 13 would allow paid time. (It is worth noting that on the question of allowing work time, 14% of overall responses were unknown and 22% were unknown on the paid time question. People filling out the survey may not have the authority to say yes to either of these questions.)

Close to half (46%) of respondents said that they would like to receive information on how their business could become a free IRS certified tax preparation site as a benefit to their employees.

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Conclusions

A small percentage of employees receive AEITC relative to the percentage who earn less than $35,000 annually. While there is no way to know how many are eligible, it may be that many are.

The majority of firms do not provide EITC/AEITC information to their employees. Of these, most would like to receive and distribute such information.

The vast majority of companies would be agreeable to inserting flyers in paychecks and/or with W-2s, informing people about EITC/AEITC, as well as free IRS tax preparation sites.

Employee assistance seems promising since half indicated willingness to host a free tax preparation site and most would post information on this.

Fewer employers would be willing to allow work time for tax preparation and even fewer would allow paid time. This question raises two points. First, if this were allowed, employers might have to provide tax preparation time for all employees, not just those who might be EITC/AEITC eligible. Secondly, the question of allowing time, whether paid or unpaid, may be one that those filling out the survey do not have the authority to sanction.

That close to half of employers wanted information on how their business/service could become a free IRS certified tax preparation site is encouraging.

Overall, this study corroborates the low participation in AEITC, the need for tax credit information for employees, the willingness of businesses to receive and distribute such information, and in some cases, to help in providing tax preparation assistance, although not during paid work time. The workplace appears to be a viable conduit for reaching EITC/AEITC eligibles.

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Recommendations

Send EITC/AEITC information to employers who requested it.
Send free tax preparation site information to willing employers late in the year to be sent with W-2s.
Follow up with employers interested in hosting free tax preparation sites and provide information on this to those who agreed to post it.
Follow up with employers who indicated interest in information on how to become a free IRS certified tax preparation site.
Re-survey employers in future for feedback on employee response to tax preparation assistance and/or to determine whether participation in AEITC among their employees has increased.
Survey private human resource firms to find out if they provide tax credit information.

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