National Checkoff Programs
Check-off programs, in which a taxpayer "checks off" a contribution to state programs on a state personal income tax form, have ballooned in scope and popularity over the last decade. Every state with a broad-based income tax has at least one check-off program.
On 2002 state income tax returns, the Federation of Tax Administrators (FTA) 2003 survey identified 220 check-off programs in 41 states and the District of Columbia . This represents a jump from 179 programs on the tax year 2000 returns and an increase from 103 in 1989, the first year FTA began tracking such programs.
Taxpayers contributed $32.8 million to the 220 programs on state tax returns processed in 2002. This is a $5.5 million jump from the 2000 survey, the largest two-year increase reported by FTA.
The use of check-off boxes on income tax returns to fund charitable organizations began in 1972, when the federal government allowed taxpayers to designate $1 of their liability to a special presidential campaign fund. States soon followed with their own check-off programs, beginning with Colorado 's implementation of its wildlife check-off program in 1977.
State check-off programs differ from the federal program in two ways. First, states generally allow more options. Virginia provides 18 different programs for taxpayers to choose among, Oregon provides a choice of 17, and Colorado has 14.
Second, most state check-offs reduce the taxpayer's refund rather than redirecting a part of the liability. With the exception of political campaign funds, all state check-offs are donations from a taxpayer's refund. On the other hand, the federal check-off and most state political check-offs make the contributions from the taxpayer's liability. These programs direct the government how to spend a portion of the tax dollars and do not affect the refund or the amount due on the return.
Types of Check-offs
The most common check-off programs provide funding to preserve nongame wildlife (35 states); 21 states have check-off programs to contribute to political campaigns; child abuse and neglect prevention is available in 20 states, and checkoff programs for breast/cervical cancer research and prevention are available in 11 states.
- Eight states have check-off programs to fund state Olympic committees.
- Eleven states have various check-off programs for veterans.
- Five states have programs for senior citizens.
- A number of programs are aimed at the research and prevention of diseases, including Alzheimer's disease and organ transplants/ gift of life programs.
Revenues
In 2000, total taxpayer donations to check-off programs reached $32.8 million. California collected the most revenue, with donations of $3.9 million to 10 programs. This was followed by Arizona , contributing $3.8 million to nine programs, and $2.6 million contributed to two programs in Minnesota . On the other end of the spectrum, Louisiana taxpayers donated only $29,757 to four programs. North Dakota reported donations of $35,719 to two programs, while Mississippi generated $44,438.
Among the individual state programs, Arizona generated $3.1 million for its political check-off, followed by the Michigan political check-off at $1.6 million. The largest nonpolitical checkoff was Maryland 's Chesapeake Bay Fund, which generated $1.2 million in contributions. At the shallow end, Rhode Island rang up only $2,210 for its Olympic fund.
Political campaign contributions have the highest participation rate with a nationwide average of 7.7 percent; they also have the lowest overall average contribution rate of $2.13. This reflects two points differentiating political check-offs from other charitable check-offs. First, since most political contributions are taken from a taxpayer's liability (not affecting the refund amount), more taxpayers would be expected to participate. Second, the amount of campaign check-offs is often limited to $1 or $2 per return in most states, while other charitable check-offs are limited only by the size of the refund, if at all.
With contributions averaging $11.07 per taxpayer, nongame wildlife check-offs were the most productive programs in 2002. Wildlife check-offs collected $7.4 million from 667,875 returns. Twenty-three states reported averaging more than $10 per contributor and two states had participation rates above 2 percent of the taxpayers. The child abuse check-off was almost as productive, with donations averaging $10.62 per contributor. The participation rate for child abuse funds averaged 0.5 percent.
Removing Check-offs
Only 11 states have a procedure to remove old check-off programs. Check-offs in most states are created by the legislature and require new legislation to remove them. The states requiring minimum amounts for check-off programs to remain on the tax return are California, Colorado, Idaho, Illinois, Louisiana, Maryland, Montana, Oklahoma, Oregon and Utah.
Source: Federation of Tax Administrators 2003 Survey of State Income Tax Checkoff Programs ( www.taxadmin.org ) |
