COMPTROLLER MENDOZA EXTENDS COVID BREAK FOR STRUGGLING TAXPAYERS
Thursday, January 6, 2022
SPRINGFIELD — Illinois’ continued struggle against COVID-19 leads Illinois Comptroller Susana A. Mendoza to announce that for a second year, low-to-moderate-income working families in Illinois will not have unpaid fines deducted from their state income tax refunds.
“A year ago, we had hoped the world would be further along in the fight against COVID-19. Unfortunately, we all know that is not the case,” Comptroller Mendoza said. “Again this year, families on the financial edge are counting on their state income tax refunds to pay bills they have been putting off as COVID caused hardships.”
Last year’s suspension of fine collections gave more than 50,000 families who qualified for the Earned Income Tax Credit (EITC) access to an estimated $18 million that would have been otherwise intercepted. Public-interest groups that advocate for poor families asked for this relief.
“We applaud the Comptroller’s decision to halt collections on people who qualify for the Earned Income Credit for another year, and hope to see similar, sustained reforms promoting financial stability for all Illinois families in the future,” said Amy Eisenstein, Coalition Manager (Heartland Alliance), Financial Inclusion for All Illinois.
“Extending this program another year means more low-income Illinoisans will keep their full tax refunds – getting them cash at a critical time. This will help underserved communities, who are disproportionately communities of color, weather the ongoing pandemic as many households continue to struggle to pay for basic needs,” said Jane Doyle, Policy & Communication Associate, Woodstock Institute. “Woodstock Institute looks forward to seeing similar, permanent reforms to support the financial security of underserved communities beyond the pandemic.”
“The pandemic upended the lives of Illinois families across the state, many of whom were already struggling to make ends meet,” said John Bouman, Director, Legal Action Chicago. “Comptroller Mendoza’s decision will help these families rebuild stability and will especially provide much-needed relief to low-income families of color. We hope this decision lays the groundwork for further, lasting changes to support Illinois families.”
About 11 years ago, the Illinois General Assembly gave cities around the state the right to contract with the Comptroller’s Office to withhold unpaid traffic and parking ticket fines — as well as other court judgments — from state income tax returns. The Comptroller’s Office then sends those collections to the local governments. The Comptroller already performed that function for other state agencies, garnishing unpaid child support for instance. Those garnishments will continue to be withheld and passed on to the custodial parent.
Two years ago, Comptroller Mendoza announced her Office would no longer withhold unpaid red-light camera ticket fines from taxpayers’ income tax refunds. That decision was made because of corruption uncovered in the red-light camera industry resulting in indictments, as well as reports showing some connected government officials got a cut of those fines. These fines also disproportionately impact low-income families. More than 90% of red-light camera tickets in many jurisdictions are not for running through red lights, but rather for failing to make a full stop during a legal right turn on red. It resulted in a net drop of nearly 87,000 annual claims against residents that would have resulted in income tax withholdings.
For this tax year, the Comptroller’s Office will not offset state tax refunds going to families or individuals who qualify for the state EITC, which is based on the federal EITC and is a widely accepted standard for determining who is considered low or moderate income.
For the current tax year (2021), that means a family of four, consisting of a single parent with three children, earning $57,414 a year or less. A single person earning $21,430 a year or less also qualifies.
All the families benefitting from this policy change are, by definition, “working class.” If you do not earn income and file a tax return, this policy will not affect you.
Here are a few things the Comptroller’s actions do NOT do:
- This policy does not eliminate fines, but rather defers collections to help people struggling through this pandemic. This is not an amnesty. The Comptroller’s Office does not have the authority to forgive debt.
- People still have a legal obligation to pay traffic and parking tickets and other fines. Cities can hire private collectors to collect these unpaid obligations, so the Comptroller’s Office encourages people to pay those fines.
- At this point, the Comptroller’s Office does not expect to extend the suspension beyond this year.
Today’s action is a narrow, targeted approach to provide COVID-19 pandemic relief for low-to-moderate-income families who need help now.