IRS urged to extend VITA tax prep program
The Internal Revenue Service needs to improve its Volunteer Income Tax Assistance to make sure it’s reaching underserved populations, according to a new report.
The report, from the Treasury Inspector General for Tax Administration, noted the VITA program offers tax preparation assistance to low-income taxpayers in urban and non-urban areas, along with disabled and elderly taxpayers, non-English speakers and Native Americans.
In December 2007, Congress appropriated funds to the IRS to set up and run a one-year matching grant program and has since appropriated funds for this program every year. TIGTA found the IRS has not set up a process to verify the reliability of data for measuring success in extending coverage to underserved populations and analyzing it to measure the success of the program. TIGTA reviewed nearly 4.5 million tax returns prepared from 2014 through 2016 and found that volunteers prepared 201,572 returns with an adjusted gross income over the income threshold set for free tax return preparation, or 4 percent of the returns. The IRS also couldn’t verify if 456,220 (or 10 percent) of the tax returns with complex tax schedules were prepared by volunteers with advanced certifications. In addition, 15,402 returns were out of scope, and some guidelines and procedures weren’t current or consistent.
“Congress enacted the VITA Grant Program to assist underserved populations,” said TIGTA Inspector General J. Russell George in a statement. “It is important for the IRS to ensure that program objectives are met and awarded funds are used as Congress intended.”
TIGTA recommended the IRS develop ways to measure the extent to which the VITA Grant Program increases coverage to underserved populations. The IRS should also identify and communicate with grantees who prepare a high percentage of tax returns over the VITA Program income tolerance level to ensure the funds are spent in compliance with Congress’s intent. The report also said the IRS should ensure that grantees have processes and procedures to confirm that only volunteers with advanced certifications prepare complex tax returns. The IRS should also make sure the VITA Grant Program internal guidelines are current and consistent with publications for VITA grantees. IRS management agreed with all but the third recommendation, and plans to take action to fix the problems.
“The VITA grant funding was introduced during a time of economic challenges that harmed our partners’ ability to maintain or increase services,” wrote Kenneth Corbin, commissioner of the IRS’s Wage and Investment Division. “Partner growth and sustainability are important components in delivering services to our targeted taxpayer segments.”