The Internal Revenue Service is doling out nearly $8 million in matching grants to groups around the country participating in its Volunteer Income Tax Assistance program.

Under a newly established VITA Grant Program, the IRS awarded the money to 111 organizations in all 50 states and the District of Columbia that plan to offer free tax preparation sites in 2009. "This is the first time we've been able to provide matching grants to support the VITA program," said IRS Wage and Investment Operating Division commissioner Richard E. Byrd Jr. in a statement.

The IRS hopes the funds will extend free tax prep services to millions more taxpayers. The funds will be used to expand services to underserved populations in cities and remote rural areas. The extra funds will also increase the capacity to file returns electronically, heighten quality control, provide better volunteer training, and improve the accuracy of returns prepared at VITA sites. A recent report by the Treasury Department's inspector general faulted the quality of some of the volunteer tax preparers' work (see Volunteer Tax Preparers Make Mistakes).

Despite the extra funding, the grant money will not meet all of the organizations' needs. A total of 379 organizations submitted applications requesting more than $30 million in matching funds.

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