COOPER CALLS ON IRS TO HELP AMERICANS SAVE
---urges IRS Commissioner Everson to change policy allowing taxpayers to direct deposit refunds into both checking and savings accounts
WASHINGTON, D.C.---U.S. Rep. Jim Cooper urged the Internal Revenue Service (IRS) to help Americans save for the future by implementing a change in policy that expands options for direct deposit. Cooper made the request in a letter sent to IRS Commissioner Mark Everson yesterday. Cooper was one of the lead Representatives coordinating the letter which was signed by a bipartisan group of 12 House members.
"While tax refunds amount to substantial income for many Americans, current IRS rules do not allow taxpayers to directly deposit their refund into more than one account," Cooper and the Representatives said in the letter. "With our national savings rate well below one-percent, it is imperative that the government embrace innovative and cost-effective means of boosting personal savings."
"We ask that the IRS adopt technical changes that would enable such 'split refunds,' thereby opening another door to savings for many Americans," the letter urged.
According to Cooper, "This is a simple change that will provide a huge financial boost for many Americans, particularly low- to moderate-income families. It is an important step in making sure we do everything we can to encourage all Americans to save and plan for the future."
The letter notes that research data shows that one of the most promising strategies for increasing personal savings --- particularly among low- and moderate-income families --- is to make direct deposit of federal tax refunds into IRAs and other similar accounts.
"A community pilot program implemented last tax season proved that even low income tax filers, those who have the least likelihood but greatest need of saving, would take advantage of this option," the letter states. In the study, about one-third of the people who were offered the option of depositing part of their refund into some form of savings did so.
"According to researchers at the Harvard Business School and the University of Kansas, participants deposited $583 on average --- 47 percent of their refunds --- into savings accounts," Cooper says in the letter. "Seventy-five percent of these individuals had no prior savings."
In addition to Cooper, other signers of the letter to the IRS include U.S. Reps Harold Ford and Lincoln Davis.