Innovative Tax Initiative Increases Free Tax Prep to 14,000 Self-Employed

Washington. D.C. — The Corporation for Enterprise Development (CFED), a national nonprofit dedicated to expanding economic opportunity for low-income people, announced that for the upcoming tax season, CFED is supporting 16 grantees across the country; together they will serve nearly 14,000 start-up businesses with tax preparation and innovative financial services.  This support, which comes through CFED’s Self-Employment Tax Initiative (SETI), will be particularly important during the deepening recession as more and more dislocated workers and low-income households are expected to turn to self-employment to meet basic household needs.  Grants ranged from $10,000 to $25,000 and went to non-profits in Austin, Baltimore, Barre (VT), Chicago, Detroit, Great Falls (MT), Miami, Minneapolis-St. Paul, New York, Philadelphia, San Antonio, Seattle, Van Nuys (CA), Washington, and Wilmington (DE).  Most of these programs will begin serving new businesses by January 15, 2009.

“SETI aims to accelerate the potential impact of the tax code to build up thousands and even millions of small and growing businesses,” said Andrea Levere, CFED President. “And now, in this recessionary environment, self-employment tax preparation becomes even more crucial and the work of SETI takes on increased importance.” During recessionary times, self-employment can function as a “job shock-absorber” as newly unemployed, over-leveraged and other financially stressed households look to “homegrown jobs” as a way to make ends meet.

Since 2005, the Self-Employment Tax Initiative has explored the tax code and tax day to scale-up delivery of financial services and business to millions of start-up micro and small businesses. SETI has found that the annual tax preparation process is a powerful “teaching moment” for new businesses as they move up the learning curve to become successful businesses.  While many new businesses misunderstand and shrink from their tax obligations, the reality is that tax preparation is the universal gateway through which nearly every new US business must pass. SETI staff estimate that there is a national market of 10 million emerging self‐employed businesses which are badly in need of quality business tax preparation.  This includes 2 million which are filing business taxes for the first time every year.   Business tax preparation can be a powerful tool both for educating new businesses and providing important refundable tax credits that can help low-income self-employed households finance start-up costs.

Besides supporting local self-employment tax preparation demonstrations, where businesses can go to get free business tax help, SETI is also active in exploring tax policy and reform for self-employed businesses. Major funding for the 16 grantees was provided by the Citi Foundation; additional funding comes from Capital One and the Annie E. Casey Foundation.

For more information, including a list of grantees, please visit www.cfed.org/go/seti.

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CFED expands economic opportunity by helping Americans start and grow businesses, go to college, own a home and save for their children’s and own economic futures. We identify promising ideas, test and refine them in communities to find out what works, craft policies and products to help good ideas reach scale, and develop partnerships to promote lasting change. We bring together community practice, public policy and private markets in new and effective ways to achieve greater economic impact. SETI is a project of CFED and the National Fund for Enterprise Development (NFED), a subsidiary corporation of CFED which is certified as a community development financial institution.

Established in 1979 as the Corporation for Enterprise Development, CFED works nationally and internationally through its offices in Washington, DC; Durham, North Carolina; and San Francisco, California.