Senators Ask Treasury to Consider Changes to Tax Time Savings Bond Program
Senators Ask Treasury to Consider Changes to Tax Time Savings Bond Program
- AuthorsBrown, Sen. SherrodRockefeller, Sen. John D., IVCardin, Sen. Benjamin L.Cantwell, Sen. Maria
- Institutional AuthorsSenate
- Subject Area/Tax Topics
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 2013-6463
- Tax Analysts Electronic Citation2013 TNT 54-20
March 4, 2013
The Honorable Jacob J. Lew
Secretary
United States Department of the Treasury
1500 Pennsylvania Avenue, N.W.
Washington, D.C. 20220
Dear Secretary Lew:
In the 2013 tax season, millions of Americans will receive a refund on their federal tax returns. While many will choose to allocate that income to their investment accounts, retirement savings, and college funds, millions of unbanked Americans cannot take advantage of these simple savings options. But the unbanked can take advantage of one reliable savings vehicle -- a savings bond.
Since 2010, Series I Savings Bonds purchased directly with tax refunds through IRS Form 8888 have helped fill a savings vacuum for the 68 million adults with insufficient access to banking services.1 In the first three tax seasons that the program was available, more than 100,000 Americans have benefited from tax-time savings bonds. Those who participate in the Volunteer Income Tax Assistance (VITA) program available to low-income filers have especially benefited from this new option. VITA program volunteers assisting filers with their returns have explained the benefits of savings bonds for personal savings, children's college funds, and retirement to thousands of low-income filers. As a result, VITA tax filers accounted for nine percent of all tax-time bonds purchased in 2010 and 11 percent of bonds purchased in 2012. Without the tax-time opportunity to purchase savings bonds, many Americans would have no formal savings vehicles at all.
As you consider the options that will be available through Form 8888 in future tax seasons, we ask that you preserve the tax time savings bond program and take steps to ensure that the program is prepared to evolve with changing technologies and operating costs. Because the Bureau of Public Debt has halted production of paper savings bonds in favor of more cost-effective electronic bonds, we ask that you consider the impact on the tax-time savings bond program and, if necessary, take immediate steps to plan for the program's transition to an electronic platform.
In the first possible tax season, we believe that the IRS should begin offering tax filers in select pilot sites, the opportunity to sign up for a TreasuryDirect account through Form 8888. After testing the electronic program and making the necessary adjustments, the IRS should then begin offering the TreasuryDirect option immediately to all filers so that the Bureau of Public Debt can continue their successful tax-time savings bond program at the least possible cost. This will also have the added benefit of bringing thousands of new savers into the TreasuryDirect system.
Tens of thousands of low-income tax filers will benefit from the continuation of the tax-time savings bond program that allows them to create or immediately access a TreasuryDirect account online. Of the low-income filers who used a VITA site to complete their taxes, 95 percent filed their taxes electronically. An electronic system could easily synchronize data between Form 8888 and TreasuryDirect, which would allow first-time bond purchasers to set up a mechanism for future tax-time purchases. In 2011 and 2012, using the current paper savings bond program, 25 percent of savings bond purchases were tax filers who had purchased savings bonds at tax time in the prior year. With an online platform to facilitate future purchases, this number is likely to increase in the future.
Like you, we believe that expanding savings opportunities for low-income and unbanked Americans is a top priority. Preserving the tax-time savings bond option and planning to move the program into an electronic age will help move thousands of tax filers into a stronger financial position. We look forward to your response and to working closely with you to expand opportunities for tax filers in the seasons to come.
Sherrod Brown
United States Senator
John D. Rockefeller IV
United States Senator
Benjamin L. Cardin
United States Senator
Maria Cantwell
United States Senator
Mr. Richard L. Gregg, Fiscal Assistant Secretary, U.S. Department of the Treasury
Mr. Steven T. Miller, Acting Commissioner, Internal Revenue Service
Mr. Van Zeck, Commissioner, Bureau of the Public Debt
FOOTNOTE
1 2011 National Survey of Unbanked and Underbanked Households, FDIC, September 2012 http://www.fdic.gov/householdsurvey/2012_unbankedreport_execsumm.pdf.
END OF FOOTNOTE
- AuthorsBrown, Sen. SherrodRockefeller, Sen. John D., IVCardin, Sen. Benjamin L.Cantwell, Sen. Maria
- Institutional AuthorsSenate
- Subject Area/Tax Topics
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 2013-6463
- Tax Analysts Electronic Citation2013 TNT 54-20