DEPARTMENT OF THE TREASURY

WASHINGTON, D.C.

December 7, 2023 

MEMORANDUM 

TO: Treasury Advisory Committee on Racial Equity

FROM: Janis Bowdler, Counselor for Racial Equity 

SUBJECT: Treasury Actions Aligned with TACRE Recommendations 

Over the past 12 months, the Treasury Advisory Committee on Racial Equity (TACRE or “the 

Committee”) has presented 29 recommendations to the Treasury Department. All 

recommendations have been shared with Secretary Yellen and referred to the relevant offices for 

review and diligence. While review and deliberations are underway, Treasury has taken several 

actions that align with recommendations, advice, and insights offered by the Committee. 

This memo provides a high-level overview of key actions Treasury has taken over the past 

several months that respond to and/or support the Committee’s recommendations. As the 

Department’s work moves forward, we continue to rely on your expertise to guide our efforts. 

We anticipate releasing a full report in early 2024 with working responses to recommendations 

received during the 2023 calendar year. 

Data Collection, Disaggregation, and Reporting

Secretary Yellen’s vision for “Modern Supply Side Economics” calls for boosting economic 

productivity and addressing inequality by making investments in people, places, and 

infrastructure that have been constrained by lack of resources and unequal access to opportunity. 

Achieving this vision would be assisted by disaggregated data collection and reporting to 

determine the impacts of our policy and programs and allow for robust accountability in our 

efforts to advance economic opportunity for underserved people and places. 

In alignment with these objectives, several TACRE recommendations call for increased 

transparency and stronger baseline evidence to support inclusive policy making and program 

implementation. Though this work is ongoing, over the past few months, Treasury has taken 

several decisive actions to examine how to incorporate disaggregated data for reporting and/or 

analysis across the Department’s capital access, American Rescue Plan Act (ARP), and Inflation 

Reduction Act (IRA) programs and tax provisions. 

• Interagency Community Investment Committee (ICIC) commitment. In May, the 

ICIC announced a slate of new actions that will strengthen how federal community 

investment programs serve communities across the country that have historically lacked 

access to resources and capital. As part of this announcement, Treasury’s Office of 

Community and Economic Development (OCED) committed to work with the 

Commerce Department’s Regional Economic Research Initiative to lead a pilot to gather 

and utilize data from multiple ICIC agencies to analyze how federal community and 

economic development investments flow into and interact in specific urban 

neighborhoods and rural counties. This pilot has the potential to benefit communities by 

providing information on federal investments in their communities that could assist in 
2 

local alignment or collaboration and a streamlined approach to community and economic 

development. 

• ARP programs. Treasury continues to evaluate the impact of ARP programs on diverse 

communities across the country. For instance, Treasury released a report providing new 

evidence that the ARP effectively delivered resources and aid to historically underserved 

communities, enabling economic recovery far more quickly than in previous downturns. 

Specifically, the report finds that the speed and strength of the response by the BidenHarris Administration helped to thwart the worst economic outcomes anticipated from 

the COVID shock for Black and Hispanic families, and that, across a broad array of 

economic indicators, the financial well-being of Black and Hispanic families have 

remained strong relative to recoveries in recent history. In June, Treasury released two

fact sheets detailing how American Rescue Plan programs and other Treasury-led federal 

initiatives have impacted Black and Latino households, businesses, and communities. 

• CDFI certification. On December 7, the CDFI Fund published a revised CDFI 

certification application and related materials that will promote responsible lending to 

financially underserved communities. The CDFI certification process had not been 

significantly updated since the founding of the CDFI Fund more than 25 years ago and 

there was a pressing need to update the Certification Application to reflect the evolution 

of community finance and to provide greater clarity about what it means to be a 

CDFI. Treasury and the CDFI Fund engaged extensively with stakeholders and listened 

carefully to feedback on a draft certification application that was made available for 

public comment in the fall of 2022. The revised certification application incorporates 

numerous updates that reflect the input of stakeholders. Moving forward, there will be 

further opportunities to hone this important certification process. 

Since the beginning of this Administration, Treasury has deployed a historic amount of 

funding to open access to capital for underserved borrowers and economically distressed 

geographies and has taken policy actions that have significantly shaped the field of 

community finance, with a focus on supporting equitable growth. The updates to the 

CDFI certification application represent an important step in Treasury’s approach to 

community finance policy. Significantly, the revised CDFI certification application 

establishes, for the first time, responsible financing standards for CDFIs, which the CDFI 

Fund will use to determine whether an Applicant has a primary mission to promote 

community development. This is a major step in clarifying what it really means to be a 

mission-driven lender. 

• Tax credit and deductions uptake. The IRS has committed to improving our 

understanding of the gap between the tax credits and deductions people are eligible for 

and the credits and deductions they claim. Concretely, the IRS has committed to using 

analytics to assess taxpayer uptake of credits, particularly those intended to benefit 

underserved communities and small businesses; publishing analyses of uptake, including 

overclaims and underclaims; and incorporating those findings into tax gap reporting. 
3 

• Emergency Capital Investment Program (ECIP) reporting. In its implementation of 

ECIP, Treasury required participating institutions to begin reporting their “qualified 

lending” activity, as well as their “deep impact lending” activity1

 on Quarterly 

Supplemental Reports (QSRs). This information will be used to determine the ECIP 

participants’ qualification for interest or dividend rate reductions on their ECIP 

investments. At sufficient levels, it can also reduce participants’ interest or dividend 

rates. In addition, these reports will collect data necessary for Treasury and other 

oversight bodies to evaluate program outcomes over time. Based on the QSRs that ECIP 

participants have already submitted, Treasury reported that in about six months of 

lending in the second half of 2022, one third of total originations – or $8.6 billion – were 

“deep impact” loans. 

IRA Green Credits

Treasury is working with the IRS to implement the clean energy and energy security provisions 

in the Inflation Reduction Act (IRA), including by supporting a range of strategies to help 

underserved communities benefit from these credits. The IRA, in addition to focusing on 

improved service delivery through a major investment in modernizing the IRS, also provides the 

largest set of incentives for clean energy investment in the nation’s history, including new 

mechanisms to monetize clean energy incentives.

• 48(e) Low-Income Communities Bonus Credit Program. Treasury, IRS, and the 

Department of Energy recently announced that during the initial 30-day application window, 

the Low-Income Communities Bonus Credit Program received more than 46,000 

applications for new energy facilities located in low-income communities, on Indian land, as 

part of affordable housing or directly benefitting low-income households from across the 

country, including 48 states and the District of Columbia. The applications represent more 

than 8 gigawatts of generation capacity, or the equivalent power used by 800 million LED 

light bulbs. This is more than four times the total capacity available for the 2023 program. 

The 2024 program, opening next year, will unlock additional capacity for this robust 

demand. Treasury designed the program to encourage participation by the institutions and 

communities most impacted by energy insecurity by setting aside 50% of the program’s 

capacity for projects that meet additional criteria. Approximately one quarter of the 

applications in the first 30 days were for new solar and wind energy facilities meeting 

additional criteria, indicating they are located in low-income areas where households spend 

the highest percent of their income on energy, and/or have had the lowest levels of historical 

investment, or are owned by emerging market participants, such as: tribal enterprises; taxexempt entities including non-profits, local or tribal governments; consumer or worker 

cooperatives; and emerging renewable energy companies. Treasury has also crafted program 

requirements to ensure applicants comply with existing consumer protection laws.

• Elective pay and transferability. Treasury and IRS have prioritized tax guidance to provide 

clarity on how communities, tax-exempt organizations, and businesses can take advantage of 

IRA’s clean energy incentives through elective pay and transferability, with proposed and 

temporary regulations issued in June, followed by a public comment period, and final rules 

1 “Qualified lending” includes lending to minority, rural, and urban low-income and underserved communities, LMI 

borrowers, and other similar lending. “Deep impact” loans are made to the hardest-to-serve borrowers, including 

those that are low-income, residents on Tribal lands and in U.S. Territories, and owners of very small businesses.
4 

forthcoming. In addition, Treasury is pursuing a series of targeted efforts focused on 

ensuring awareness and uptake by underserved communities. This includes collaboration 

with other Federal departments and agencies that are a part of the Thriving Communities 

Network, a whole of government approach to “coordinate strategy, collaborate across 

initiatives, and target deployment of a full range of Federal place-based technical assistance 

and capacity-building resources to urban, rural, and Tribal communities experiencing a 

history of economic distress and systemic disinvestment.” Treasury has been working with 

organizations to identify tax exempt projects that can go through the elective pay pre-filing 

registration portal before it opens to the public. In addition to leading numerous webinars 

and speaking engagements hosted by nonprofit channel partners, Treasury, in coordination 

with the White House Infrastructure Implementation Team, is also leading an education and 

engagement campaign around IRA tax credits, utilization of State and Local Fiscal Recovery 

Funds (SLFRF) funding and opportunities for Bipartisan Infrastructure Law funding focused 

on high poverty (greater than 20 percent) and low capacity (historic population decline) 

cities.

• Prevailing wage and apprenticeship requirements. Treasury and IRS have prioritized 

tax guidance on prevailing wage and apprenticeship, working in close collaboration with 

the Department of Labor (DOL). Proposed regulations were issued in August, and 

Treasury and IRS are carefully considering public comments as we develop final 

regulations. The registered apprenticeship provisions specifically offer significant 

potential to diversify and grow the worker pipeline, which has historically been 

homogenous and siloed. Treasury is collaborating with BlueGreen Alliance and Climate 

Jobs National Resource Center (CJNRC) to amplify the connections between the IRA’s 

pro-worker policies and inclusive workforce opportunities. On November 14, Treasury 

hosted and DOL joined a “how-to” session on prevailing wage and registered 

apprenticeship requirements relevant to the Inflation Reduction Act. The session had 

over 250 attendees and included an overview of the requirements, relevant tax benefits, 

and information on understanding wage determinations and how to request qualified 

apprentices.

Strengthening Program and Service Delivery

Consistent with your recommendations, Treasury is committed to delivering top-quality service 

to individuals, families, and businesses. For instance, the IRA focuses on promoting fair tax 

administration and to ensuring that IRS modernization efforts positively impact vulnerable and 

underserved taxpayers. The IRS Strategic Operating Plan, released in April, highlights how the 

agency will improve service to ensure taxpayers receive the credits and deductions for which 

they are eligible, test for and eliminate bias in audit selection, and expand digital services. They 

are also devoting resources to ensure tax compliance among high-income and high-wealth 

individuals, complex partnerships, and large corporations, while maintaining fairness. Through 

the Direct File pilot, the IRS is demonstrating their commitment to evaluating tax preparation 

and filing options that are more accessible for taxpayers. The Direct File pilot this year will 

particularly benefit low- and moderate-income taxpayers.
5

• Direct File pilot. This pilot will allow the IRS to learn and assess its ability to address 

critical challenges and opportunities including customer support, state integration, and 

technology needs. Consistent with standard industry practice with new modern 

technology service design, the IRS will execute the pilot in a phased manner, allowing 

access for increasingly more eligible taxpayers to access the service to file their 2023 tax 

returns.

Direct File will be available to taxpayers with Social Security numbers as well as ITINs. The 

service will work on mobile devices as easily as it does tablets, laptops, and desktop 

computers, and will include dedicated customer support from the IRS. The pilot will be 

available in twelve participating states in 2024: Arizona, California, Florida, Massachusetts, 

New Hampshire, New York, Nevada, South Dakota, Tennessee, Texas, Washington, and 

Wyoming.

• Addressing audit disparities. As part of a broader effort to rebalance the IRS’ 

enforcement activities, further the IRS’ core objectives of equitable and efficient tax 

administration, and improve payment accuracy, IRS Commissioner Werfel announced 

that the IRS would be substantially reducing the number of audits specifically focused on 

refundable credits in Fiscal Year 2024. In addition, the IRS has announced a set of initial 

changes to EITC audit selection processes and two pilots examining potential further 

changes. The results of the pilots will be publicly reported and will be used to inform 

audit selection in the future. 

• Outreach and stakeholder engagement. In addition to engagement via the TACRE, the

Direct File pilot participant recruitment strategy includes forging partnerships with nonprofit and stakeholder groups who interact directly with Direct File pilot eligible 

taxpayers. In November 2023, UST and IRS hosted a partner briefing, during which time 

partnering organizations learned about the Direct File pilot and were invited to join 

efforts to recruit participants for the invite-only phase of the pilot.

• Financial inclusion strategy. Consistent with congressional direction, Treasury is 

developing a national strategy on financial inclusion. The strategy will aim to ensure that 

consumers, in particular those from underserved populations, including low-income 

communities, communities of color, women and others, have equitable access to financial 

information, products, and services that support them in building financial security and 

assets and meeting other needs and goals. The strategy will also aim to define objectives

for financial inclusion, set measurable benchmarks for tracking progress, and provide 

recommendations on how public policy, government programs, financial products and 

services, technology, and other tools can promote financial inclusion. Treasury is 

committed to a robust stakeholder engagement effort to inform the strategy, including a 

series of roundtables and bilateral meetings to gather insights from a diverse range of 

stakeholders across the financial ecosystem. In November, Treasury hosted an in-person 

convening of fifteen consumer advocate, civil rights, and research organizations. A 

Treasury Request for Information on financial inclusion is forthcoming and will be 

posted to the Federal Register to solicit additional public input.
6 

Racial Equity Research and Policy Priorities

The establishment of the Treasury Equity Hub, with several interdisciplinary research and 

policy/program staff to be hired into career positions under Director Diane Lim, serves to expand 

Treasury’s contribution to racial equity research in significant and lasting ways. The Equity Hub 

brings together workstreams across Treasury policy and program offices with a coordinated and 

collaborative focus on economic equity, and immediately increases Treasury’s overall capacity 

to do equity-focused research. The Equity Hub will have filled its four most senior roles by the 

end of December and will be on track to fill the remaining four roles in the first quarter of 2024. 

As the Hub’s own capacity is still growing, they will continue to steer, collaborate, and advise on 

ongoing equity-focused work across Treasury offices, including the following. 

• Equitable recovery research. An analysis by Treasury’s Office of Economic Policy on 

the Equitable Recovery connected the benefits from an equitable and inclusive economic 

recovery to the Treasury mission of maintaining a sustainably strong overall 

(macro)economy. For instance, the report shows that gaps between Black and white, and 

Hispanic and white unemployment rates have closed to near historic lows in 2023. 

Despite interest rate increases beginning in early 2022, Black and Hispanic 

homeownership rates rose 2.9 and 1.2 percentage points between 2019 and 2022. 

Finally, from 2019 to 2022, median wealth, adjusted for inflation, rose 60 and 47 percent 

for Black and Hispanic families respectively.

• Small business report card. Treasury released a report card to demonstrate how 

Americans have used the funds made available to them via the State Small Business 

Credit Initiative (SSBCI), SLFRF, and Emergency Capital Investment Program (ECIP) to 

strengthen small business creation. The SSBCI alone provides nearly $10 billion to 

support small businesses and promote entrepreneurship and includes $2.5 billion in 

funding and incentives to support underserved businesses and jurisdictions that 

successfully reach those businesses. SLFRF data show that through the first half of 2023, 

jurisdictions receiving those funds have budgeted over $5 billion for over 1,400 projects 

in support of small businesses and small business development. In addition, ECIP has 

invested over $8.5 billion in CDFIs and minority depository institutions (MDIs) that can 

use the funds to increase lending to small businesses, among other targeted communities 

and purposes. 

• Blog series. Treasury has launched an economic policy blog series that details the origins of 

racial economic disparities and their implications for the national economy. Future efforts in 

collaboration with the Equity Hub will focus on combining data analysis with storytelling 

examples as a way to reach a broader audience.

• Racial equity analysis of tax policies. Office of Tax Analysis staff developed and 

continues to refine and validate an imputation method to predict race/ethnicity based on 

observed relationships in U.S. Census Bureau (Census) data between race/ethnicity and 

specific (first and last) names and (small area) geographic locations supplemented with 

additional tax information. A version of this imputation method made possible research 

on audit disparities (Elzayn et al. 2023) and another version was used in a study of the 

distribution of a set of tax expenditures by income and race/ethnicity categories (Cronin, 
7 

DeFilippes, and Fisher 2023). In a collaboration with IRS and Census staff, OTA staff 

also studied the demographics of recipients of the first round of Economic Impact 

Payments in 2020. OTA staff have organized a session on “Advances in Imputing Race 

and Ethnicity to Administrative Data” to be held at the 2024 annual meeting of the Allied 

Social Sciences Associations, which will feature refinements to some of this work, new 

work by Treasury staff that measures marriage penalties and bonuses for different groups 

(Lin et al. 2023), and work by other researchers.

Opportunities for Small Businesses

Treasury recognizes the potential for the federal government procurement practices to support 

small and underrepresented businesses and to help them grow. New investments via the IRA 

have created an opportunity for the Department to influence such opportunities. 

• SSBCI technical assistance. Treasury recently announced a new $75 million 

competitive grant program, the SSBCI Investing in America Small Business Opportunity 

Program, to support technical assistance for very small and disadvantaged businesses.

• IRS procurement commitment. The IRS has committed to exceeding the 

Administration’s goal by dedicating 19% of its FY 2024 spending to small and

disadvantaged businesses. Because the IRS represents a significant portion of the 

Treasury budget, this commitment is an important milestone in advancing equity in 

Treasury procurement for underrepresented communities. 

• Investing in America (IIA) companies. At the Treasury Department’s Freedman’s Bank 

Forum in October 2023, Vice President Harris announced a call to action for companies 

in growing sectors such as semiconductor manufacturing and clean energy manufacturing

to commit to spend at least 15% of their U.S. procurement dollars with small and 

underserved businesses by 2025. Micron, Excel Energy, and Air Products joined this call 

to action as first movers, representing billions of dollars in business diversity spending. 

The Economic Opportunity Coalition is working to expand on these commitments.