Pro-bono tax services: the role of tax academics and students.

One of the long-standing pro-bono services provided in the tax area has been through the efforts of accounting students and their professors, working with the IRS and state tax agencies, to establish and operate sites for the Volunteer Income Tax Assistance (VITA) program. The VITA program is a great opportunity for tax advisers to volunteer their services to help low-income taxpayers. Interested practitioners and faculty can contact their local university accounting department and local IRS office to learn about training and service opportunities.

Program Basics

The VITA program is a national program that provides free return preparation assistance to individuals with low-to-moderate income (under $36,000), and those who are elderly and/or disabled or have limited English proficiency. These individuals are frequently discouraged and frustrated by the tax law's complexities and do not file returns, even though they may be entitled to a refund. Often, they cannot afford commercial tax preparers and CPAs. For them, the VITA program offers confidential and quality tax consultations. It is particularly important at a time when the IRS is reducing services at its Taxpayer Assistance Centers (TACs).

In 2004, 1.9 million returns were prepared by more than 70,000 volunteers working at 14,000 sites through the VITA program; this number increased in 2005. From 1999-2005, volunteer return preparation doubled, from roughly 1 million to 2 million returns. In the same period, VITA-prepared e-filed returns increased from 41% to 80.2%.

The VITA program is diverse; its sites are sponsored by educational institutions, community organizations, military groups and those dedicated to serving special-needs taxpayers (such as the elderly). VITA program sites generally operate from mid-January until April 15. The program is overseen by the IRS's Stakeholder Partnership, Education and Communication (SPEC) function.

Academia's Involvement

Service-minded faculty: The ATA recently surveyed its members about their involvement in the VITA program; see ATA Pro-Bono Tax Services Taskforce--March 5, 2005, Executive Summary of Survey Results, at www.aaahq.org/ata/tax-policy/reports/reports.htm. The group's approximately 800 members consist of tax academicians and others interested in tax education and research. Over 100 members responded to the survey. Seventy-nine of these are faculty involved in pro-bono tax work; in 2004, they assisted in completing more than 30,000 Federal and state returns. Approximately half of the services were provided oil campus, the other half at community sites. The off-campus venues included not-for-profit agencies, houses of worship, libraries, prisons, malls and senior and community centers. A majority of the services were aimed at low-income taxpayers, followed by international students, then other college students.

A majority of the respondents have had a long-term commitment to the VITA program; over 35% have been involved for over 10 years and an additional 25% for over five years. Only 35% receive recognition and/ or support from their universities for their efforts. Despite the lack of institutional rewards (such as course release, merit pay or other recognition), these volunteers continue to contribute to tax education and compliance through the service-minded nature of their efforts.

Students get "valuable practical experience": Over 50% of the survey respondents recognized the immense value of the VITA program to student experience. Respondents viewed the experience as a win-win situation--the students gain valuable practical experience, and the community greatly appreciates the assistance to low-income taxpayers desperate for help.

Negative survey comments focused on the lack of department and university recognition and support for a time-consuming community service. Slightly less than 40% of participating students receive course credit for their involvement, even though the program offers a hands-on learning experience, allowing students to interview real taxpayers, apply tax law, prepare returns and learn tax software programs. Further, students can take responsibility and pride in the quality of the tax assistance they offer. Students taking a for-credit VITA program course often write a lengthy, required reflection paper that identifies the benefits of their VITA experience, which include an improved understanding of tax law, technology, interviewing procedures and problem-solving skills. Many students who have not already specialized in tax subsequently select it based on their VITA program experience.

While volunteers may donate as much or as little time as they wish, most participate two to three hours per week.

Training: Training and oversight are crucial factors in running a quality VITA program site. Almost 70% of survey respondents require students interested in the program to complete at least one accounting- or tax-related course. Over 90% then receive additional, site-specific training, more than 70% of which is provided by a faculty member and 20% by the IRS.

VITA program volunteers receive training that focuses on the type of client they will be helping. Volunteers learn basic tax preparation techniques and technology, enabling them to handle most returns competently, or at least know how to find an answer. Minimum required training topics include filing status, dependents, income, adjustments to income, tax computations, the earned income credit (EIC) and the child tax credit. (Complex returns are not prepared at VITA sites, although many would argue that the EIC is one of the most complex tax provisions.) Volunteers do not sign returns and are protected from legal liability by the Volunteer Protection Act of 1997.

The IRS has developed a new online tool, "Link and Learn Taxes," an e-learning course designed for "individuals and groups who volunteer their time and knowledge to help fellow taxpayers complete their tax returns" (for information, see www.irs.gov/app/vita/index.jsp). The course is geared toward training and certifying VITA program volunteers.

Most VITA program sites also prepare state returns, which require supplemental training materials. State revenue departments often offer these materials and other useful information on their websites. IRS-provided software (TaxWise) allows preparation of most state returns.

A VITA-based grant program would be welcome, similar to the Low Income Taxpayer Clinic program, which funds tax controversy work under Sec. 7526. Survey respondents indicated that any potential grant money would be used to fund computers, printers, oversight, advertising and staff support.

Program Resources

Tax advisers and academicians interested in becoming involved in the VITA program can obtain additional information from the IRS's website, at www.irs.gov/individuals/index.html, under "Partnering Opportunities & Resources For National and Local Organizations," or they can e-mail [e-mail].

Through a public-private partnership between the IRS and the tax software industry, taxpayers can access flee, online tax preparation and electronic filing services through www.irs.gov. Eligible taxpayers may prepare and file their Federal returns using online software provided by Free File Alliance, LLC.

The AICPA has recently joined the effort to recruit additional VITA program volunteers. Information can be found at www.aicpa.org/info/aicpa_update_102.htm.

The University of Texas at Austin has a website to assist international students and other nonresident aliens in preparing U.S. tax returns and required declaration statements. The site contains step-by-step instructions covering which forms to use, frequently asked questions and links to additional sites; see www.utexas.edu/international/taxes.

Many of the community-based coalitions have websites with information on their programs. For example, The National Community Tax Coalition offers extensive resources for free tax preparation at www.tax-coalition.org. The Center on Budget and Policy Priorities annually offers updated toolkits in various languages for understanding and marketing the EIC, the child credit and other tax benefits to low-income taxpayers; see www.cbpp.org.

The American Association of Retired Persons offers free tax preparation services through its Tax-Aide program; see www.aarp.org/money/taxaide. Finally, the American Bar Association's Tax Section sponsors a tax information site at www.TaxTips4U.org.

Conclusion

President Bush's proposed budget for FY2006 includes as a goal, "focusing Internal Revenue Service customer service on telephone and Internet and away from walk-in service centers." As the IRS closes TACs, additional pressure will be placed on all volunteer-based sites to assist taxpayers in preparing their returns. Although the budget dedicated to the VITA program has grown over the years (from an estimated $3 million in FY2001 to approximately $18 million in FY2004), the number of sites operated and taxpayers assisted has grown at a much greater rate.

Tax faculty and students contribute significantly to the VITA program through site coordination and quality return preparation. Most receive only intangible rewards for their efforts--the satisfaction of using their specific tax knowledge to help others in their community, the ability to interact with a variety of people, and the smiles of those grateful for their help. As TACs continue to close, the IRS needs to find ways to provide additional support to quality academic and community-based programs that allow low-income taxpayers to receive the face-to-face assistance needed to comply with tax laws. As noted on its website, "volunteers selflessly and without compensation make a significant contribution to the tax system each year."

Student Involvement in the VITA Program through Beta Alpha Psi 

Beta Alpha Psi (BAP) is an international honors organization for accounting, finance and information systems students. BAP encourages student chapters to participate in the VITA program. Beginning in 2004, it formally partnered with the IRS to encourage students to become involved. That year, 88 chapters participated in some way, an increase of 19 chapters over 2003. Some chapters provided student volunteers at community sites; others run them. Many chapters offered on-campus sites to assist international students.

Of the 35 chapters reporting detailed information for the 2004 filing season, slightly more than 600 students gave over 11,000 volunteer hours and prepared almost 9,000 returns. At the BAP annual meeting, students expressed overwhelming support for the VITA program and the vital experience it provides.

SPEC At-A-Glance

By Mark Pursley, IRS Director, SPEC, Atlanta, GA, and Sue Sottile, IRS Director of Strategic Planning, SPEC, Washington, DC

Since its inception in October 2000, SPEC has established strong relationships with its partners, based on mutual business goals and interests. (Partners engage and invest in IRS programs to strengthen low-income communities and families.) SPEC provides computers, software and training to ensure that volunteers are qualified and ready to prepare quality returns. For instance, during the 2005 filing season, SPEC partners received over 10,000 computers and 6,600 printers, and ordered more than 6,800 software packages in addition to marketing and tax products. SPEC also instituted a "train-the-trainer" program.

SPEC allocates the VITA program's finite resources based on the commitment and investment of individual partners, taxpayer needs and performance. As a result, resources are not uniformly spread out. Very few of SPEC's partners are fully independent VITA program sites. However, in some cases, they develop their own training materials to deal with specific issues facing their communities, such as helping international tax students, visiting scholars or military personnel.

Commitment to Quality

In FY2005, SPEC implemented a quality review and assurance program with its internal and external partners. It developed a multi-year business plan to examine quality standards for volunteer return preparation and training. Operational practices were established during the 2005 filing season, to:

Improve accuracy of site information through readiness plans and site reviews

* A quality review program is in the works to improve the accuracy and timeliness of VITA program site information.

Improve training and volunteer commitment to quality

* New minimum required training topics ensure coverage of the most common tax issues.

* Revised and standardized testing and certification. For the first time, all VITA program staff directly involved in preparing returns had to pass an examination. A multi-year quality improvement plan will ensure that VITA program volunteers are qualified.

* Standards of conduct for volunteers, to provide quality service and uphold ethical standards.

Improve the return preparation process

* Standardized (1) best practices and policies, (2)intake, (3) factgathering and (4) the post-return preparation process.

* Revised tax reference guide to take the guesswork out of complex lax determinations.

* Conducted structured reviews of completed returns with the taxpayer present, to improve the review process.

Improve operational oversight/quality assurance

* A tiered quality assurance process validates results of quality measures and identifies issues and trends for immediate action:

1. The IRS performed 3,000 site reviews to determine if VITA program sites were operating properly.

2. AICPA members performed 14 shopping reviews, anonymously playing the role of a taxpayer with a made-up scenario.

3. SPEC conducted weekly quality meetings with internal and external partners, and its Quality Assurance Team ensured ongoing identification of trends/issues and immediate implementation of actions.

4. Implemented new measures for assessing tax return accuracy. The IRS Office of Program Evaluation and Research Analysis assessed the accuracy of VITA program returns and linked downstream outcomes, including the rate of mathematical errors, and the number of returns selected for audit and found to have errors. It concluded that volunteer-prepared returns are as compliant as others and, in some cases, are more so. Based on the results, it will develop new quality measures for volunteer returns.

Editor's note: Prof. Nellen is a former member of the AICPA Tax Division's Strategic Planning Task Force and Tax Executive Committee. Profs. Bauman, Nichols, Anderson and Outslay are members of the American Taxation Association's (ATA's) Pro-Bono Tax Services Task Force. They wish to thank Katie Kenagy and Mary Rozek for their assistance in summarizing the ATA survey data discussed in this column. For more information about this column, contact Prof. Nellen at [e-mail] or Prof. Bauman at [e-mail].