From: Francine Lipman

To: TACRE

Subject: ITIN Modernization Recommendations

Date: Monday, November 13, 2023 3:54:40 PM

Attachments: FINAL Memo on ITIN Needs for DPC[4].pdf

** Caution: External email. Pay attention to suspicious links and attachments. Send

suspicious email to suspect@treasury.gov **

Hot off the presses two separate recommendations for IRS-Individual Taxpayer Identification

Number (ITIN) modernization:

First, a memo from an Immigrant Advocacy Coalition from their meeting with the White House

Task Force on New Americans earlier this month:

And

The Internal Revenue Service Advisory Council (IRSAC) 2023 annual report ITIN-specific recommendations

released last week.

You can access the entire report here:https://www.irs.gov/newsroom/irs-advisory-council-issues2023-annual-report

The ITIN modernization section begins on page 163 of the report, but I have pasted the list of

recommendations below.

ITIN Modernization Recommendations

1. Develop a pre-filing ITIN application procedure that allows new ITIN applicants and ITIN holders

with expired ITINs to submit Form W-7 separately and ahead of their income tax return.

2. Identify two to three key improvements that would cause more VITAs to provide CAA services,

such as:

a. Review the CAA application process to make it more accessible to minority communities.

b. Publicize the CAA program as a VITA engagement and promote it by highlighting each VITA site

that partners with a CAA or acquires the ability to provide CAA services.

c. Declare a CAA-ITIN Awareness Day.

3. Test and scale up the effect of combined VITA/CAA services by executing a carefully targeted

“pilot program” to evaluate the co-location of VITA services with new CAA services in two to three
key geographical areas where TACs are not easily reached.

4. Establish a requirement for all VITA sites to apply for at least one CAA or show a working

agreement with a CAA as part of their grant application.

5. Improve the Acceptance Agent (AA) Program AA/CAA locator online search tool by incorporating

the same zip code search mechanism used by the IRS VITA locator tool, including the option to

search for AA, CAA, or both, and including a support process for AAs and CAAs to update their

contact information.

6. Ensure that Quality Assurance (QA) on the IRS Direct File Pilot includes multiple test cases with

ITIN holders as the primary, secondary, or dependent. 120 Acceptance Agent

Program: https://www.irs.gov/individuals/international-taxpayers/acceptance-agent-program. Get

Free Tax Prep Help:https://irs.treasury.gov/freetaxprep/.

7. Build a specialized customer service ITIN unit with consistently and highly trained staff that is also

diverse, multilingual, and multicultural.

8. Review Form W-7 instructions with the goal of including better plain language instructions and

update required documents to include educational materials and illustrative examples when

appropriate.

9. Evaluate the capability of using document upload tools to minimize the use of paper for Form W-7

applications and allow for electronic filing.

10. Allocate IRS staff on Taxpayer Assistance Centers to perform CAA and uploading services,

without the taxpayer having to mail their documents, W-7 and 1040 documents when staffing allows

it.

11. Digitize the ITIN application process by creating an online portal for applications and

supplemental documents, if needed.

12. Work with the Treasury Department’s Office of Tax Analysis (OTA) and other partners to better

understand and publish the needs of taxpayers with ITINs by using data and research.

As always, if you have any questions please do not hesitate to reach out.

Best,

Francine J. Lipman

William S. Boyd Professor of Law

University of Nevada, Las Vegas

William S. Boyd School of Law

4505 South Maryland Parkway
Box 45103

Las Vegas, Nevada 89154

francine.lipman@unlv.edu

Twitter handles are @narfnampil and

@UNLVLawLITC

Tune in for TaxTalkTuesdays on KUNV 91.5FM at 8:45am or

link https://hyperlink.services.treasury.gov/agency.do?

origin=https://scholars.law.unlv.edu/taxtalk/

Office 702-895-5092

Access my Scholarship at

https://hyperlink.services.treasury.gov/agency.do?origin=www.ssrn.com/author=334178
1

MEMORANDUM

To: Alexander Wang, Deputy Director for Immigration, Domestic Policy Council (DPC)

Mikaela Gerwin, Special Assistant for Health, Veterans and Immigration, DPC

Sonia Lin, Senior Fellow, Consumer Financial Protection Bureau

From: Laura MacCleery, Senior Policy Director, UnidosUS

Santiago Sueiro, Senior Policy Analyst

Jackie Vimo, Senior Policy Analyst, National Immigration Law Center

Pablo Blank, Director, Immigrant Integration, CASA

Luz Arévalo, Senior attorney, Director, Low-Income Taxpayer Clinic, Greater Boston 

Legal Services

Angela Divaris, Attorney, Greater Boston Legal Services 

Brayan Rosa Rodriguez, Executive Director, Instituto del Desarrollo de la Juventud

Date: November 6, 2023

Re: Request for White House and DPC Leadership on Individual Taxpayer Identification 

Numbers (ITIN) Modernization and Inclusion

We are so grateful for your interest, time, and attention on steps to address challenges 

concerning the Individual Taxpayer Identification Number (ITIN) application process. Below is

more detail on key issues and recommendations for your consideration. Work on this issue 

comports well with the goals of the White House Task Force on New Americans. Optimizing 

ITINs is central to the Task Force’s goal of welcoming immigrants by reducing integration 

obstacles and amplifying supportive programs. ITIN reforms would help to reinforce that 

immigrants are vibrant contributors to both our economy and communities. The Task Force’s 

mandate for immigrant success and an urgent need to rationalize the system for ITIN applicants 

are powerfully interwoven.

Overview of Current IRS Process to Obtain an ITIN and Its Serious Challenges

Individual Taxpayer Identification Numbers (ITINs) serve a vital economic purpose for 

immigrant families. Federal law requires all workers to file tax returns and pay taxes on income 

earned in the United States, regardless of immigration status. Yet immigrants who are ineligible 

to obtain a Social Security number (SSN) must navigate a special Internal Revenue Service (IRS)

process to obtain an ITIN in order to be compliant with these tax laws. As we explain below, 

access to an ITIN represents an on-ramp to financial inclusion and self-sufficiency. Rationalizing 

ITIN rules to ease immigrant access opens pathways for individual and communal prosperity 

that benefit us all.

Access to an ITIN has also come to be a key step in unlocking doors to community contribution 

and financial inclusion that would otherwise be closed. ITIN eligibility enables homeownership, 

education investments, and small business entrepreneurship that benefits whole communities.

With ITINs, immigrants can open a bank account, qualify for a loan or mortgage, start a business 
2

and contribute to their local economy, and claim tax credits that support their family’s health 

and wellbeing. 

ITINs are now a tool to access state benefits nationwide. Many states allow ITIN holders to 

receive state tax benefits, including the state Child Tax Credit (CTC), state Earned Income Tax 

Credit (EITC), and other benefits. One in six children living in poverty in the U.S. has an ITINholding parent. Teens also need them to claim access to school stipends linked to educational 

programs. Without an ITIN, hundreds of thousands of immigrants will lose an opportunity to 

claim those benefits. 

Without an SSN or an ITIN, immigrant families face severely restricted options. Millions earn 

income in eligible jobs or through entrepreneurship but cannot properly file and pay required 

taxes. Many resort to carrying cash, risking loss or robbery, or rely on predatory, high-cost 

financial services. Homeownership, college savings, and professional licensing can become

practically unattainable. 

In particular, we have heard frustration from city agencies seeking to provide opportunities for 

but which cannot issue stipends to a student whose family lacks an ITIN; from nonprofits 

offering training for childcare providers, but whose members cannot obtain needed state 

professional licenses; and from small entrepreneurs who lack a current federal tax reason to 

apply for an ITIN but whose prospective clients demand they must have an ITIN in hand to be 

able to hire and pay for services using a 1099 tax form. 

We should be facilitating these steps towards shared prosperity and economic growth, not 

pushing people into unstable or dangerous jobs in an underground economy. We should not be 

discouraging independent contractors from starting a business, or workers seeking to address 

the tremendous need for licensed, high-quality childcare in their local neighborhoods, or 

students from participating in the paid internships for which they qualify, or states from 

providing social supports in the form of tax relief for the most vulnerable families.

As the IRS Strategic Operating Plan acknowledges, modernizing ITIN processing also fits 

squarely within the IRS commitments to digitization, equity, and customer service. Forthcoming 

recommendations from the IRS Advisory Council (IRSAC)—to be published November 8, 2023—

are likely to underscore the need for improvements to the ITIN application process and its 

supports from IRS. Optimizing ITIN processing also provides a pragmatic opportunity to advance 

the goals of the White House Task Force on New Americans. ITIN reform would help remove 

barriers to integration and directly enable economic participation.

Under the current system, immigrants’ efforts to comply with federal tax obligations comes at a 

needlessly high cost. Despite contributing billions in tax revenue using ITINs, immigrants must

navigate an application process requiring extensive paperwork, following some 14 pages of 
3

fine-print instructions, and enduring months-long wait times for the return of essential 

identification documents, and scant support. Opaque rejection notices from the IRS over minor 

issues like a missing phone number can trigger repeated delays that can last for months and 

require repeated corrections. The resulting process is frustrating for prospective immigrant 

taxpayers and exacts needlessly high costs for basic administration for the IRS. 

Policy Steps to Address Gaps, Increase Federal Tax Revenues, and Advance Immigrant 

Inclusion

Modernizing ITINs offers an opportunity to improve equity in the tax system and enable 

immigrant families’ economic and civic participation. A failure to address hurdles in the way of 

millions of potential tax contributors means millions in foregone federal revenues. Alleviating 

administrative burdens through sensible reforms provides shared benefits. Effective community 

partners stand ready to help, but they face substantial barriers in assisting immigrant taxpayers.

ITIN holders trying to comply with tax obligations face numerous barriers that include:

• Applicants are unable to obtain an ITIN without complying with an IRS policy 

that the W-7 ITIN application must be filed alongside their tax return. This

simultaneous filing is not required by statute but was an announced change to IRS 

policy in December 2003, alongside conforming changes to the W-7 Form and its 

instructions. Such changes were opposed at the time by the Taxpayer Advocate 

Service, which argued that the tax return requirement would “place unnecessary 

administrative hurdles” on taxpayers seeking to comply with tax laws and lacked 

any underlying tax or business justification. Notably, another implication of this 

requirement is that a child may not apply for an ITIN unless the presence of the 

child on the return alters the federal tax household definition (i.e., from single to 

head of household) or allows for a federal tax credit. 

▪ As a practical matter, this can impose a long delay even on those who are 

eligible for an ITIN as they must wait until the next tax year to file both 

the application and return together. 

▪ As noted, having an ITIN can enable state tax filing, securing a driver's 

license, and accessing social programs at the state level. The absence of 

ITIN can become a Catch-22, making it harder to earn wages, access 

credit, qualify for a loan, or open a small business. 

▪ Although the IRS has long known that ITINs are used for range of 

purposes, since 2003, the agency has articulated a hostile policy stance, 

including deep and expressed antipathy to the use of ITINs to access state 

benefits or other forms of economic supports and opportunities.

▪ This policy has sometimes been justified as fraud prevention, although it 

has no discernible relationship to efforts to reduce fraud, which could be

far more effectively enhanced with additional monitoring on both steps 

of the process (obtaining an ITIN and filing a return), and, given the 

passage of the last 20 years, fails to reflect the ability to address fraud 
4

through other, more modern means, including advances in data 

management, information security, and anti-fraud analytics. 

▪ While a lack of formal foreign identification for immigrants was once far

more common, the increased issuance of passports, consular IDs, and 

municipal IDs today provides far more standardized and verifiable forms 

of documentary evidence to confirm identities, as used by the CAA 

programs.

▪ The requirement for a tax filing to accompany the ITIN paperwork was 

recently extended in 2022 as a matter of IRS policy to include ITIN 

renewals.

▪ In the 1990s, when ITINs were initially created, issues pertaining to nonresident taxpayers were another major factor under consideration. Yet a 

vast majority of ITIN holders today are long-term residents with settled 

lives in the U.S., rather than transitory investors. 

▪ Separate consideration of ITIN applications on a rolling basis would likely 

allow far more dedicated attention to fraud prevention that does the 

rush of returns and applications in tax season, while also facilitating all

the benefits articulated here. 

▪ Some taxpayers, such as those that are self-employed, face legal 

obligations for estimated tax payments and the inability to secure a 

timely ITIN will prevent them from making payments under the law. 

Similarly, if a taxpayer needs an extension to file, they must still make a 

timely payment, which is not feasible without an ITIN account number. 

▪ Obtaining an SSN, which are also designated as tax identification 

numbers (TINs), have no such requirement, although they are also 

commonly used in fraudulent schemes.

▪ Allowing separate IRS review of the W-7 application and a later but 

corresponding tax return would not require any statutory or regulatory 

changes, as the role of the IRS in issuing an ITIN (in light of the 

administrative convenience related to processing the ITIN before a 

return) would remain “solely for the purpose of federal tax 

administration,” just as it was prior to the 2003 policy changes.

▪ In light of the three-year renewal period, if needed, the W-7 form could 

include an assertion that the ITIN application will relate to an anticipated 

tax purpose for the individual or child in at least one or more of the 

subsequent three tax years. 

▪ Although the IRS has historically imposed needless barriers for ITIN filers, 

the agency has also recently implemented measures to remove obstacles 

for applicants who need ITINs to access state programs. During the peak 

of the pandemic, the IRS created a special process to “assist eligible [New 

York] residents who are also ITIN applicants meet requirements for 

the New York State's Excluded Worker's Fund (EWF) payments.” Under 

this new process, ITIN applicants could schedule an appointment to visit a 

Taxpayer Assistance Center (TAC) to apply for an ITIN and receive a 
5

stamped copy of their application to submit as part of their EWF 

application. Taxpayers who had previously applied, but not yet received 

their ITIN, could schedule an appointment to bring a copy of their 

application to a TAC; the IRS would then stamp their copy as received for 

their EWF application. The creation of a special process for ITIN filers to 

access EWF benefits is evidence that the IRS has the authority to 

implement policies to facilitate ITIN filer access to state benefits more 

broadly.

▪ The IRS should take appropriate and reasonable steps to address fraud 

as needed across all of its programs, reverse its 2003 policy shift on 

initial ITIN applications and its 2022 policy change on ITIN renewals, and 

adjust its W-7 filing form and filing requirements accordingly. 

• A burdensome application process that can impose months-long delays. And 

timing is a problem—applicants filing a paper W-7 form will wait up to 11 weeks 

after their documents are received by the IRS to get their ITIN number issued if 

there are no errors in the application. Afterwards, once the ITIN has been 

approved, the IRS will start processing the paper tax return. For example, if a 

taxpayer applied for an ITIN alongside their tax return to receive a child tax credit 

refund in February of a given year, it is likely that the family would not receive 

their refund until the following June or after. Transitioning to electronic filing 

would improve efficiency and accuracy over error-prone paper applications. Userfriendly online tools are needed so immigrants can readily comply with tax 

obligations.

▪ In contrast, applications for new business tax IDs take applicants just one 

day. 

▪ The IRS should allow rolling acceptance and processing of ITINs, 

improve the clarity of W-7 instructions and required documentation 

and allow electronic filing of W-7 applications;

▪ ITIN filers should be included in the vision for Direct File and other 

planned IRS customer service upgrades.

• In the absence of a Certified Acceptance Agent (CAA), applicants must mail their 

original passport and other personal documents to the IRS, which can leave

immigrants without their only form of legal identification for months. This leaves 

immigrants unable to access hospitals, schools, or complete other essential tasks 

until documents are returned. It also risks permanent loss of critical ID, a violation 

of privacy, and enables identity theft.

▪ Every taxpayer assistance site should house a CAA and the IRS should 

develop secure additional means of digital identity verification 

consistent with privacy protections. 

• The rejection of documents missing one or two pieces of data and/or frequent 

rejection of applications for children on documentation grounds (yet the process

lacks standardized forms for schools and medical records to complete, and 

modern report cards fail to display home addresses as the forms anticipate). 
6

These repeated ITIN denials also generate higher administrative costs for the IRS

to process incomplete returns and issue corrected refunds.

▪ The IRS rejects applications over minor clerical issues like missing phone 

numbers on medical records or inconsistencies in how schools format 

student attendance or report cards. 

▪ Filing taxes with dependents requires obtaining an ITIN for each child, 

triggering multiple rounds of document submissions and rejections.

▪ The IRS should develop standardized forms for common supporting 

documents and should make medical providers and schools aware of 

them and work to eliminate rejections over minor issues like missing 

phone numbers that can easily be verified online.

• A lack of an online application option, unlike most modern systems.

▪ The IRS should develop a digital application process for the ITIN, expand 

e-signature and document upload flexibilities, and expand and 

centralize digital resources and supports for ITIN applicants.

▪ The IRS should also create a process for direct filing, multilingual tools, 

and timely appeals.

• Expert sites like Volunteer Income Tax Assistance (VITA) locations frequently 

decline to help with ITINs due to a lack of training and support. IRS Taxpayer 

Assistance Centers (TACs) are limited in number and unavailable in many areas 

with high immigrant populations. Moreover, TAC centers are often very 

intimidating spaces for certain taxpayers and might dissuade attendance because 

of a lack of community trust. 

▪ The IRS should adopt a “no wrong door” approach to ITIN applicants 

and develop CAA programs and capacity at every VITA and TAC by 

requiring VITA grant recipients to provide CAA support, co-locating ITIN 

application assistance at VITA sites alongside tax prep services.

▪ IRS should fund more nonprofits to offer free or low-cost multilingual 

CAA help and increase VITA funding to cover the more than 150 million

Americans eligible to receive tax assistance. 

▪ IRS should create a dedicated ITIN site, a customer support unit and 

multi-lingual hotline, and take the following steps to: 

• Expand IRS training, materials, and technical assistance available 

to VITA programs on ITIN filing and documentation processes;

• Create a dedicated point of contact at IRS for VITA/CAA 

volunteers to access help resolving ITIN application problems or 

questions for their clients;

• Allow VITA and CAA sites to upload verified documents 

electronically instead of applicants mailing originals to IRS;

• Ensure VITA/CAA sites have secure print and photocopy access 

to provide verified copies of documents like passports;

• Fund more mobile VITA programs that can physically meet ITIN 

filers at accessible community locations like libraries, schools, or 

churches;
7

• Use VITA/CAA sites as intake points for rolling ITIN applications 

before tax season rush; and

• Add VITA and CAA partners to IRS-led working groups guiding 

ITIN modernization efforts.

• CAAs provide expert assistance that many ITIN applicants desperately need to 

navigate complex documentation requirements. Obtaining CAA certification to 

help applicants is itself an arduous, opaque process requiring IRS approval and 

can take over a year, resulting in very limited numbers of CAAs. 

▪ There is an ongoing moratorium on new Certifying Acceptance Agent 

(CAA) approvals. In August 2022, the IRS abruptly announced it would 

halt approval of new CAAs until spring 2023, with no concrete timeline 

for resuming approvals, and new information suggests that the training 

will no longer be provided free-of-charge, even to non-profits.

▪ Each day the moratorium continues, the window closes further on 

training new CAAs in time to help process ITINs in tax year 2024.

▪ The IRS should end the moratorium, immediately process pending 

applications on an expedited basis, and provide fee waivers for any 

training or filings costs for non-profits. 

▪ IRS should also collaborate with immigration legal services providers 

and partner with community organizations that serve immigrant 

communities to encourage participation in the CAA program.

▪ The list of current CAAs on the IRS Website should be improved for 

accuracy.

• A statutory requirement for ITIN renewals every 3 years if the number is not 

included in a federal tax return.

▪ Given the precipitous drop in ITIN filings since the PATH Act, the IRS 

should standardize and publish ITIN application and approval data.

White House Leadership Is Needed to Prioritize ITIN Modernization and Economic Inclusion

At their core, barriers to obtaining and filing for ITIN holders undermine the substantial 

economic and social contributions of immigrant taxpayers. Immigrants enrich communities as 

entrepreneurs, workers, and neighbors. Easing ITIN access upholds American ideals of fairness 

and opportunity.

The outdated ITIN system sends the troubling message that immigrants are unwelcome in the 

communities they help sustain. Rationalizing ITIN administration recognizes immigrants’ vital 

role and aligns with principles of equity and inclusion. Streamlined ITIN access offers a 

pragmatic entry point to affirm immigrant contributions.

We have seen praiseworthy results from White House leadership in the recent past on key tax 

initiatives. The White House's successful multi-pronged approach on CTC expansion provides a 
8

roadmap for driving ITIN modernization, including hosting awareness days with family stories, 

collaborating with nonprofits on enrollment campaigns targeting underserved communities, 

and convening Cabinet officials to coordinate agency promotion and enrollment assistance. 

Similar strategic stakeholder engagement, purposeful communications, and inter-agency 

coordination focused on ITIN reform could inspire urgency at IRS and compel attention on 

improving access for immigrant families.

This task is not less important. Improving ITIN administration provides pragmatic opportunities 

to remove a major and permanent barrier inhibiting immigrant inclusion and equity. 

Transitioning to digitized systems, expanding assistance through trusted partners, restoring tax 

credit access, and coordinating across agencies offer achievable near-term steps. Most 

importantly, as noted above, such reforms align with the values-driven vision of the White 

House Task Force on New Americans. 

Extensive improvements are achievable through regulatory updates and administrative 

guidance in the near term. For instance, allowing electronic ITIN applications and expanding 

language access falls within existing IRS authority. There is also broad discretion to simplify 

processes and moderate rules based on equity considerations. An immediate focus could be 

pressure on the CAA moratorium and need for customer service improvements on ITINs in 

light of the coming tax season.

Specific steps the White House could take in light of the report from IRSAC and its 

recommendations on or after Nov. 8

th include:

• Formally transmitting a set of responsive ITIN reform recommendations to the 

Department of Treasury for review and asking for a point person to oversee and 

track progress on implementation on the recommendations.

• Directing the IRS to provide a briefing within 60 days detailing current ITIN 

application operations, challenges, and modernization plans. 

• Working with IRS to shift practical requirements for obtaining an ITIN and to remove 

the regulatory requirement for federal tax liability at the time of filing. 

• Working with US Treasury to embrace a vision of integrating VITA and CAA supports 

with a “no wrong door” approach.

• Initiating monthly working group meetings led by White House and Treasury officials 

with IRS ITIN leadership to drive digitization efforts and monitor improvements.

Reforming the ITIN process provides concrete opportunities to remove barriers to immigrant 

inclusion and equity. Transitioning to streamlined, electronic systems, expanding assistance 

through partners, restoring tax credit access, and coordinating across agencies offer viable 

near-term steps. Immigrants are integral to America's future: a vision to modernize ITINs would 

affirm their belonging and ensure that both immigrants and our national and local economies 

can reap the full benefits of their rich contributions. We stand ready to work with you on these 

and other ideas you may have. 
From: Christina Knudsen

To: TACRE

Cc: Wendy Baumann; Jon Gaines; Kamaljit Jackson

Subject: WWBIC Comments to Treasury Advisory Committee on Racial Equity

Date: Wednesday, November 22, 2023 2:12:31 PM

Attachments: image001.png

WWBIC Letter to Treasury Advisory Committee on Racial Equity.pdf

** Caution: External email. Pay attention to suspicious links and attachments. Send

suspicious email to suspect@treasury.gov **

Dear Secretary Yellen, Deputy Secretary Adeyemo, and Chair Nutter,

The Wisconsin Women’s Business Initiative Corporation (WWBIC) submits the following comments

to the Treasury Committee on Racial Equity as we work to advance racial equity in the economy and

address acute disparities in communities of color. Thank you for all you do for us and so many

others!

Join us for the WWBIC

Annual Luncheon!

Tuesday, November 28th

(Giving Tuesday!) is the

day for our 2023 annual

celebration at the

Brookfield Conference

Center. Get more details

or register here

Christina Knudsen, MEPD (she/her/ella) | Vice President,

Development & Communications

WWBIC

A Leading Innovative Statewide Economic Development Organization

Statewide Headquarters/Milwaukee Office

1533 N. RiverCenter Drive | Milwaukee, Wisconsin | 53212

Direct: 608-799-5323 | General Info: 414-263-5450

cknudsen@wwbic.com | https://hyperlink.services.treasury.gov/agency.do?

origin=www.wwbic.com

Check out our training sessions

Click below to view digital versions of our program catalogs:

Greater Milwaukee | Northeast | South Central | Southeast | Southwest

Reward our clients with your business!

Use the updated and improved client directory on our website.

If you’re a WWBIC client, click here to add your business to our directory.

Join the WWBIC Team! We are searching for passionate people to join us in our

mission of "Putting Dreams to Work". Learn more about our open positions at

wwbic.com/careers

Milwaukee/Waukesha | Madison | Racine | Kenosha | Appleton | Green Bay |

La Crosse | Statewide

 
U.S. Department of Treasury

Treasury Advisory Committee on Racial Equity

1500 Pennsylvania Avenue NW

Washington, DC 20220

Wednesday, November 22nd, 2023

Secretary Yellen, Deputy Secretary Adeyemo, and Chair Nutter:

The Wisconsin Women’s Business Initiative Corporation (WWBIC) submits the 

following comments to the Treasury Committee on Racial Equity as we work to 

advance racial equity in the economy and address acute disparities in communities 

of color. Since 1987, WWBIC has served as the leading innovative economic 

development corporation and CDFI that is “Putting Dreams to Work” by assisting 

microenterprise and small businesses throughout the 72 counties in Wisconsin. We 

open the doors of opportunity by providing underserved individuals who are 

interested in starting, strengthening, or expanding businesses with access to critical 

resources such as responsible financial products and quality business/personal 

financial training. WWBIC focuses on individuals who face barriers in accessing 

business financing and technical assistance support including women, communities 

of color, veterans, and lower-wealth individuals. As a culturally effective 

organization, WWBIC strives to improve the economic well-being of underserved 

individuals by advancing inclusive entrepreneurship and facilitating self-sufficiency 

strategies.

In our over 36 years of impact, WWBIC has assisted over 72,700 individuals; loaned 

over $107 million to small business borrowers; helped entrepreneurs create and 

retain over 18,000 jobs; and started, strengthened, and expanded over 9,000 

businesses. In 2022, alone, WWBIC served 5,233 clients while approving 

$10,613,333 in capital and closing $8,511,667 in small business loans. WWBIC’s 

clients started, strengthened, or expanded 2,162 businesses creating or retaining 

5,019 jobs. All of this work is made possible via WWBIC staff and over 220 

volunteers who provided 24,495 hours of counseling and training support.

Although the U.S. Department of Treasury has supported CDFIs like WWBIC via the 

Community Development Financial Institution Program Financial Assistance Grants, 

there are still resources that need to be strengthened in order to close the 

disparities faced by entrepreneurs of color. In an effort to close this gap, WWBIC 

participates as a Kiva U.S. Trustee and is able to provide crowd sourced 0% interest 

loans up to $15,000 through Kiva@WWBIC, as an SBA Microloan lender, and SBA 

Community Advantage Lender. WWBIC is able to provide loans between $1,000 and 

$350,000 to entrepreneurs, including microenterprises and startups.

As a CDFI, WWBIC uses a holistic approach and includes high levels of training and 

technical assistance to borrowers. WWBIC’s extremely proactive service delivery 

model for providing technical assistance to current and potential 

microentrepreneurs mitigates the risk of lending to traditionally unbankable 

borrowers as well as increases the success and longevity of microenterprises and 

their ability to create jobs. Clients interested in borrowing from WWBIC receive preloan technical assistance from WWBIC Loan Officers who work with clients to 

prepare their loan applications and business plans before presentation to WWBIC’s 

Loan Committee for approval. 
Pre-loan technical assistance also includes accounting, human resource management, 

and industry trends through group training as well as one-on-one consultation.

A WWBIC Small Business Consultant is assigned to each WWBIC microentrepreneur 

upon loan closing and begins providing individualized technical assistance that 

continues throughout the life of the loan. WWBIC also leverages its volunteer corps of 

over 220 community partners including those from Chambers of Commerce, SBA 

Service Corps for Retired Executives (SBA SCORE), banks, law firms, accounting firms, 

and others who act as coaches and mentors to WWBIC microentrepreneurs and assist 

them with industry-specific technical assistance. WWBIC microentrepreneurs also have 

access to WWBIC’s online on-demand Initiate Portal which provides 2/47 access to 

small business resources including more than 100 interactive tools, templates, videos, 

articles, and guides for microentrepreneurs, all in ways that support various learning 

styles.

A key component to WWBIC’s technical assistance is the provision of credit recovery. 

WWBIC’s credit recovery services and training enhance the entrepreneurship training 

to entrepreneurs in not only understanding their credit score, but going deeper in 

ensuring that they understand the holistic nature of credit and their buying power that 

is tied to this credit. WWBIC walks alongside the entrepreneur for a full year during 

their credit recovery journey; teaching and guiding to ensure sustainability and 

independence to tackle credit issues, should any arise in the future. WWBIC’s holistic 

model of entrepreneur support is unique in ensuring that credit is not temporarily 

“repaired,” but that entrepreneurs understand the power of credit, and training them 

to understand credit and how to keep their recovered credit in excellent status. 

WWBIC clients are supported for one full year of credit recovery through certified 

credit counselors who are teaching and educating on how credit scores, product 

mixtures, and credit histories inform this score. WWBIC’s combination of training, 

credit recovery, and one-on-one financial counseling allows for greater long-term 

success for personal financial wellness and building generational wealth. Financial 

wellness and wealth accumulation is transformative across households and 

generations; it supports economic mobility and helps solidify a household's social, 

political, and economic status. WWBIC especially focuses on Black and Hispanic 

households who persistently are over-represented at the bottom of socioeconomic 

distribution (March 2022, Racial Disparities in Household Wealth Following the Great 

Recession, UW-Madison Institute for Research on Poverty). 

Too many Americans have been denied the opportunity to become small business 

owners by turning their entrepreneurial ideas into action because they lacked the 

required capital to do so. Between 90% and 95% of entrepreneurs who hire additional 

employees require some amount of financing to start their business, making 

responsible capital a critical requirement for new job and business creation. However, 

many programs meant to provide capital to entrepreneurs are biased in favor of 

established businesses or individuals with higher individual wealth. (Kauffman 

Foundation, 2022, America’s New Business Plan).
Across small business owners, black-owned firms that applied for traditional financing 

were least likely to receive all of the financing they sought (13%), followed by Hispanicowned (20%) and Asian-owned (31%) firms. This is in comparison to 40% of whiteowned small businesses receiving the total amount of financing they requested. Even 

among firms with good credit scores, black-owned firms were half as likely than whiteowned firms to receive financing (Federal Reserve System, 2021 Small Business Credit 

Survey).

Traditional banking institutions reported a year-over-year decline in small business 

lending with the end of the Paycheck Protection Program even while credit usage by 

small businesses remained stable and demand for new credit increased during the 

same time period. Banks also tightened their credit standards for small businesses, 

especially for new business owners (Kansas City Fed, October 2022, Small Business 

Lending Survey ).

While Wisconsin’s overall unemployment rate of 3.1% and poverty rate of 10.4% were 

lower than the national average, Wisconsin has 289 high poverty areas according to 

the CDFI’ Funds definition. The US Census Bureau’s Small Business Pulse Survey found 

that in December of 2021, 29% of small businesses reported the pandemic having a 

large negative impact on business and 42% reported a moderate negative impact. This 

was especially true for Black-owned businesses. As of April 2020, 41% of black-owned 

business closed and only about 12% of Black-owned and Hispanic-owned businesses 

received a federal Paycheck Protection Program (PPP) payment (The Milwaukee 

Business Journal, October 20, 2020).

The lack of PPP payments to small and minority-owned businesses was also 

exacerbated by system gaps which includes the high amount of time needed to 

complete a PPP application, a lack of understanding of what was needed to be done to 

receive a PPP payment. Business owners also reported that they felt locked out of the 

process because they were not connected to a chamber of commerce, a traditional 

bank, or other networks. PPP could have gone a long way in assisting these businesses, 

with 80% of minority-owned businesses in Wisconsin reporting cash flow issues as a 

challenge to surviving the pandemic and their ability to make payroll (Wisconsin 

Economic Development Corporation, Ethnically Diverse Business Community COVID 19 

Response Assessment, 2022).

According to the most recent data by the Federal Reserve, the average loan amount 

for a new small business loan from a traditional bank is $593,000 (Federal Reserve 

System, 2017, Survey of Terms of Business Lending). Requests for capital below this 

amount are often ignored by traditional banks and lenders, with CDFIs and SBA 

Microloan and Community Advantage lenders covering this gap up to $350,000; 

meaning a gap of $243,000 potential exists. 

WWBIC Recommendations

The Treasury through its CDFI Program has the ability to strengthen small business 

lending CDFIs, much like it did to development CDFIs through the New Markets Tax 

Credit Program and Capital Magnet Program. A similar program could spur investment 

into small business lending CDFIs like WWBIC, allowing for the lending gap; and with it 

the economic gap to be closed.

WWBIC’s model of entrepreneurship relies on credit recovery for borrowers. Credit 

recovery should be listed as an eligible development activity for CDFIs.