Government funding is scarcest just when it’s needed most. That cruel recession irony is prompting one city advocacy group to launch a campaign that could add hundreds of millions to the pockets of low-income New Yorkers–without costing the city a penny.

More than half a billion dollars in tax refunds meant for poor working families go untouched each year because as many as 200,000 city taxpayers who are eligible for the rebate fail to fill out their tax forms properly, or do not file at all.

According to studies commissioned by the Internal Revenue Service, between 15 and 25 percent of taxpayers eligible for the Earned Income Tax Credit, a federal- and state-funded rebate, do not receive their payments. To qualify, a family must earn less than $32,000 a year, individuals less than $10,500. A family with two children that brings in $12,000, for example, will receive the largest possible credit, $4,008. On top of that, New York State offers its own tax credit totaling 25 percent of the federal refund.

However, many workers, particularly non-English speaking immigrants who fear deportation and former welfare recipients who are new to the job market, do not file their taxes at all. Others do not know to request the EITC on their tax forms.

“We’re in such a financial crisis and there’s this big pile of money just sitting there,” said Amy Brown of the Community Food Resource Center. To get that money to the people who need it, CFRC has therefore begun a campaign to better publicize the EITC. Between now and April, the group plans to offer free tax preparation at soup kitchens, credit unions and other locations, to run a toll-free information line, and to place ads on Spanish-language radio stations.

With a growing recession and tremendous job loss since the September 11 attacks on the World Trade Center, Brown said she expects large numbers of taxpayers to become eligible for the tax credit for the first time this spring. It’s money that no one doubts will help: “That $5,000 is almost 40 percent of that family’s wages,” said Russell Sykes, a vice president with the Schuyler Center for Analysis and Advocacy, which helped write the state EITC bill. “That can single-handedly jump that family over the poverty level.”