A Student Perspective on the IRS’s VITA Program

By Patrick E. Doyle, Michael W. Matt, and Bradley T. Owens

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VITA Vital Statistics

The VITA program was initiated in 1969 under the IRS’s mandate to provide free taxpayer assistance to those who could not afford a paid preparer. The VITA program aided 104,000 taxpayers in 1970, its first year of operation. According to the IRS, 70,000 VITA volunteers, working out of 14,000 different sites, produced 1.9 million tax returns, 70% of which were e-filed, during the 2004 filing season. The IRS VITA program comprises several targeted programs for the general public, military personnel, and older Americans.

VITA volunteers are not expected to be tax experts, but they receive training specifically geared toward the type of VITA client they will be assisting. Volunteers do not sign any tax returns, and are protected from legal liability by the Volunteer Protection Act of 1997. Volunteers are often members of local charitable organizations. The IRS also encourages participation by educational institutions, which can provide computers and facilities to assist student volunteers. Many colleges and universities across the United States have participated in the VITA program. Students often make ideal volunteers because they generally have excellent computer skills, a desire to learn through experience, and the motivation to provide service.

The IRS has created Stakeholder Partnerships, Education and Communication (SPEC) sites throughout the country to build upon the volunteer model. Universities, other organizations, and individuals that would like to find out more about becoming involved in a VITA program can receive more information from the IRS at www.irs.gov or e-mail partner@irs.gov.

Programs in New York State

The accounting students at St. Bonaventure University participated in an innovative New York State/IRS VITA program that is geared toward preparing tax returns for individuals eligible for the Earned Income Tax Credit (EITC). The EITC is a refundable income tax credit available to low-income workers with earned income. The EITC has overtaken other transfer programs in the amount of benefits provided to eligible claimants on both the federal and the state level. In recent years, approximately 15% of individual federal individual tax returns have claimed the credit. According to preliminary IRS data for 2003 returns, 17% claimed the EITC. Exhibit 1 demonstrates that a significant portion of federal EITC claimants have been VITA clients.

The New York State tax assistance program was initiated three years ago to encourage low-income workers to claim the EITC through tax returns prepared for free. Sixteen states (Colorado, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New York, Oklahoma, Oregon, Rhode Island, Vermont, and Wisconsin) offer a state EITC. New York provides a sizable state credit, which has steadily increased from 7.5% of the federal EITC in 1994 to 30% in 2003. Almost 14% of New York State individual tax returns have claimed the credit in recent years (Exhibit 2).

Low-income workers eligible for the EITC are an important focus of the IRS and New York State VITA programs. New York State Office of Temporary and Disability Assistance Commissioner Robert Doar has stated that “[t]he EITC has become our largest, and most effective, anti-poverty program. The EITC works because it supports work.” In 2002, more than 50% of federal EITC claimants had adjusted gross incomes under $15,000. And yet, IRS personnel estimate that more than 320,000 New Yorkers eligible for the EITC fail to claim it.

Colgate University became the first educational institution in New York to participate in the new tax assistance program in 2003 (for 2002 tax returns). Colgate does not offer accounting or business courses, but became involved in VITA through the research interests of an economics professor.

St. Bonaventure University joined the New York State program for the 2004 filing season. Students that participated in the VITA program were all accounting majors.

New York State officials are in communication with additional colleges about participating in the VITA effort for the 2005 filing season. The VITA program functions as a partnership between the IRS and the New York State Office of Temporary and Disability Assistance (OTDA). The free tax return assistance is offered through a county’s department of social services (DSS), and coordinated by the IRS and the OTDA. During the 2004 filing season, 19 county DSS participated, assisted by the Community Action Program (CAP) in two counties and the United Way in two additional counties (Exhibit 3). According to OTDA, New York’s VITA volunteers prepared a total of 2,214 tax returns in 2004, generating average refunds of $2,500 for low-income working families. Those interested in finding out more about the New York State VITA program should contact the Office of Temporary and Disability Assistance at www.otda.state.ny.us or e-mail the Public Information Office at NYSPIO@dfa.state.ny.us.

VITA at St. Bonaventure’s

The New York State VITA program at St. Bonaventure University was organized by the Bonaventure Accounting Association, a student organization that promoted the project to accounting students and organized the student side of the volunteer effort. The accounting professors at St. Bonaventure were initially contacted by the Cattaraugus County Department of Social Services (CCDSS), but it was student members that decided to take on the VITA project at the beginning of the fall 2003 semester.

The students were excited about the VITA project and looked forward to the opportunity to apply their knowledge to real tax returns while giving back to the local community. As an added bonus, the volunteer time would count toward internship requirements. Although a small group was expected for the first year, over 40 students initially signed up, and the final group of volunteers was around 30.

VITA volunteers are required to attend training, which concludes with preparing a sample return, passing a quiz, and receiving certification. The CCDSS led three training sessions to accommodate all of the potential volunteers. Based on their IRS training, the CCDSS instructors had allotted two hours for volunteer training, which ultimately took less time than anticipated because of the accounting students’ background with the material.

Students signed up for specific morning, afternoon, or evening volunteer timeslots on a schedule coordinated by a CCDSS staff member and two Bonaventure Accounting Association officers. They were generally assigned to timeslots in pairs, underclassmen matched to upperclassmen.

The general IRS VITA program is set up for taxpayers to walk in without appointments to have questions answered and returns prepared. The CCDSS understood that students’ busy schedules would make a walk-in system difficult, so taxpayers were required to make appointments. United Way volunteers scheduled appointments and, after the first few no-shows occurred, made reminder calls to taxpayers.

The New York State VITA program is aimed at EITC eligible workers with simple tax returns—Forms W-2 and 1099, plus the EITC—that undergraduate accounting students can handle without much training.

The United Way volunteers screened taxpayers when they called for appointments; students were instructed to tell anyone with more complicated returns to see a paid preparer. Students were also allowed to ask the CCDSS staff or United Way volunteers for help, and did not have to prepare any returns they were not comfortable with. The screening process worked well, and only two taxpayers had to be turned away.

Volunteer facilities are an important planning issue. The meetings with taxpayers and the preparation of their returns took place at the United Way office in Olean, New York. The CCDSS staff handled e-filing the tax returns, because the United Way office did not have Internet access.

When taxpayers arrived, they were given a sheet to fill out with basic information such as Social Security number, address, marital status, and information about children, which made it easy for volunteers to start preparing their returns. After the returns were completed, multiple copies of the forms for VITA and the IRS were made. The returns were e-filed by CCDSS the following day (no one requested paper filing).

The students quickly realized that they had to ask for all the paperwork the clients could give, including W-2, unemployment, and disability forms. Volunteers would sometimes finish a return and then the taxpayer would produce yet another form that was needed to complete the return correctly. Student preparers initially found it difficult to ask for personal information, but this became easier with practice.

After a few returns, the process started to become familiar and major problems were not encountered. The students had VITA guides to help determine EITC and Child Tax Credit eligibility. But once volunteers became more familiar with the rules, they didn’t have to depend on the pamphlets as much.

The student volunteers were initially nervous that people would not trust them to prepare their tax returns correctly, and there were a few instances when taxpayers did not seem completely comfortable. Some commented on the preparers’ youth. The students reflected on their experiences and came up with some suggestions for future volunteers:

• Dress up for appointments. People will be more comfortable with volunteers that look professional. A suit and tie are not necessary, but avoid t-shirts and sweatpants.
• Make it a point to greet the person with a handshake and introduce yourself. It almost always seemed to make taxpayers more comfortable.
• If the training did not cover every situation encountered, take the initiative to do extra work and track down the necessary information. When in doubt, ask someone else. There will be times when questions cannot be answered and situations will be difficult to handle.

A VITA Reward

Volunteering is one of the best ways to become involved in the local community. The students signed up as VITA volunteers to provide low-income members of the community with tax relief and gain hands-on experience. Many taxpayer questions were answered and concerns addressed. Nearly every individual was surprised, elated, and grateful upon the completion of their tax return.

When the 2004 tax season ended, St. Bonaventure accounting students had helped to prepare 104 tax returns, bringing $191,000 to the working poor of Cattaraugus County, of which $105,000 was EITC. While the gratitude of the taxpayers would have been a sufficient personal reward, the IRS, the Department of Social Services, and the United Way honored the students with a dinner and awards ceremony. The program participants appreciate the positive feedback and recognition that they have received from the federal and state agencies.

We student volunteers gained valuable experience in tax practice, as well as in the ability to communicate with and interact with a variety of people. Helping those who are in need is one of the best feelings in the world. When a low-income family walked into the VITA office with their children, praying for an EITC refund so they could pay their electric bill, getting them a sizable refund was an indescribable feeling. Looking back, as much as we students were able to give to the community, the experiences we received have proved to be priceless.

The authors would like to thank Susan B. Anders, PhD, CPA, for her assistance, contributions, and guidance on this article. Anders is an associate professor of accounting at St. Bonaventure University and serves as the VITA Advisor. Professor Anders is also a member of the CPA Journal Editorial Board.

The editors would like to thank the students and administrators at Baruch College for their assistance.

Editor’s Note: The accounting students at St. Bonaventure University were the first from an accounting program to participate in an innovative 2004 New York State/IRS Volunteer Income Tax Assistance (VITA) program aimed at low-income workers qualifying for the federal and state Earned Income Tax Credit. Three of these student volunteers provide some general background information on the IRS and New York State VITA programs, and then discuss their own experiences in the student-managed program at St. Bonaventure.