Improvements are needed in the Internal Revenue Service’s (IRS) Volunteer Income Tax Assistance Grant Program to ensure that the program extends tax return preparation to underserved populations, according to a new report released publicly today by the Treasury Inspector General for Tax Administration (TIGTA). The Volunteer Income Tax Assistance (VITA) program provides tax preparation assistance to low-income taxpayers in urban and non-urban locations, persons with disabilities, elderly taxpayers, non-English speaking individuals, and Native Americans.
The IRS’s first goal is to improve service to taxpayers to make voluntary compliance easier. To help achieve this goal, the IRS implemented the VITA Program. In December 2007, Congress appropriated funds to the IRS to establish and administer a one-year matching grant program and has since appropriated funds for this program annually.
TIGTA initiated this audit to evaluate the IRS’s oversight of the VITA Grant Program to determine whether the IRS is meeting program objectives and using awarded funds as directed.
In its review, TIGTA found that data exist that can be used to measure success in extending coverage to underserved populations. However, the IRS has not established a process to verify the reliability of the data and analyze it to measure the success of the program. TIGTA’s review of the almost 4.5 million tax returns that grantees prepared during Grant Years 2014 through 2016 identified that: 1) volunteers prepared 201,572 (4 percent) returns with an Adjusted Gross Income amount that exceeded the income threshold set for free tax return preparation; 2) the IRS could not verify if 456,220 (10 percent) tax returns with complex tax schedules were prepared by volunteers with advanced certifications; and 3) 15,402 returns were out of scope. Moreover, some guidelines and procedures were not current or consistent.
TIGTA recommended that the IRS: 1) develop processes and procedures to measure the extent to which the VITA Grant Program increases coverage to underserved populations; 2) identify and communicate with grantees who prepare a high percentage of tax returns over the VITA Program income tolerance level to ensure that funds are expended in compliance with congressional intent; 3) ensure that grantees have processes and procedures to confirm that only volunteers with advanced certifications prepare complex tax returns; and 4) ensure that 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 corrective action.
“Congress enacted the VITA Grant Program to assist underserved populations,” said J. Russell George, Treasury Inspector General for Tax Administration. “It is important for the IRS to ensure that program objectives are met and awarded funds are used as Congress intended,” he added.