Opportunities for Improving Referrals by VITA Sites to LITCs

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We welcome guest bloggers Janice Feldman and Jonathan Blake. Janice is currently a volunteer attorney at the Harvard Law School Federal Tax Clinic. Prior to volunteering at the clinic, Janice worked for over 30 years in tax administration, first with the Department of Justice, Tax Division and then with the IRS, Office of Chief Counsel. She retired in 2019. At the time of her retirement, Janice was the Division Counsel/Associate Chief Counsel (National Taxpayer Advocate Program) at the Office of Chief Counsel. Jonathan is a student attorney with the clinic and one of the leaders of the law school’s VITA clinic.  Keith

January 24th marked the start of this year’s tax filing season, and as a result the Volunteer Income Tax Assistance (VITA) program is now available to aid qualified taxpayers with the filing of their returns. Depending on the location, assistance may be given in person or virtually through a secure website. We applaud the wonderful service the VITA volunteers provide and their ability to adapt to the pandemic conditions through the use of technology.

Since 1969, the IRS’s VITA program has offered free basic tax return preparation to qualified individuals. These individuals include taxpayers with household income below a specified cap (currently $58,000), disabled taxpayers, and limited English-speaking taxpayers. The locations where the assistance is provided – called VITA sites – are set up in public libraries, community centers, and similar facilities.

Although the IRS oversees the VITA program by administering training for volunteers and making grants, the IRS does not staff the sites. Community members, ranging from college students to retirees, sign up to volunteer; neither work experience nor formal education in taxation is required. VITA is not intended to be a replacement for the broader set of services a taxpayer may obtain from a tax practitioner. (However, tax practitioners make excellent VITA volunteers. To learn more about becoming a volunteer and how to be matched with a local VITA site, please click here).

In doing research at the Harvard Clinic, it has come to our attention that sometimes VITA volunteers may not realize if an issue is beyond the scope of what a volunteer can handle, or if they do, may not know how to direct the taxpayer to get the help they need elsewhere. This blog post attempts to put a spotlight on this problem and propose a few ideas to remedy it.

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Some taxpayers who visit VITA sites have tax issues that extend beyond preparation of their tax returns. For this reason, VITA volunteers are trained to consult the Scope of Service chart. This chart states whether returns requiring certain IRS forms and schedules may be prepared by VITA.

There exists a whole spectrum of tax matters that are not addressed on the Scope of Service chart. For example, responding to a notice of deficiency is not a part of the list of services that a VITA volunteer can do. So what happens if among the envelopes containing the taxpayer’s W-2 and 1099s, the VITA volunteer sees a notice of deficiency was issued to the taxpayer and his ex-wife, claiming additional tax due for an earlier tax year because the ex-wife has unreported income? Alternatively, the taxpayer could present the notice to the volunteer after reading the question about IRS letters on the VITA intake form, which taxpayers fill out upon arrival at a VITA site. The volunteer may not understand the significance of the taxpayer receiving the notice of deficiency, and may simply prepare the current year return and not advise the taxpayer about the significance of the notice or that a Low Income Tax Clinic (LITC) might be able to help. Per Congress, VITA sites are encouraged, when appropriate, to inform taxpayers about LITCs. See Internal Revenue Code Section 7526A(g)(3).

In this example, the taxpayer might be a good candidate for obtaining innocent spouse relief. The VITA volunteer cannot explore this issue, but the LITC can. And even if the volunteer recognizes the need for a referral to an LITC, the volunteer may struggle with the mechanics of the referral as no procedures for referral are in place. Likewise, there are no clear rules on which LITC to contact. Examples like this highlight two challenges for VITA volunteers and site coordinators: (i) educating volunteers so they can identify fact patterns where LITC assistance would be appropriate and (ii) effectively connecting the taxpayer with an LITC.

The first challenge is largely dependent on the adequacy of training. The site coordinator training materials dedicate one slide to LITCs, consisting primarily of links to IRS webpages. The lengthier site coordinator handbook does enumerate issues that LITCs can handle, but it is unclear if site coordinators who do not have experience in these tax areas will know enough to spot potential referral opportunities after just reviewing this list. The training materials for volunteers go into no greater detail. Importantly, none of the exams required to be a site coordinator or a volunteer have any questions on making a referral to an LITC.

An initiative from the Center for Taxpayer Rights, the LITC Support Center, is attempting to fill this gap in training. As covered in a recent Procedurally Taxing blog post, the LITC Support Center is “creating materials for VITA sites and taxpayers about … what they can do via self-help and when they need to reach out to an LITC for assistance.” These documents are available – and will be added to over time – on the website’s Resources for Taxpayers tab. The IRS should consider incorporating the same sort of content in the VITA training materials and exams it produces.

Updating the training materials should of course not limit exploration by the IRS of other measures. In particular, perhaps the optimal time to ask the taxpayer about receipt of IRS letters or other tax issues is when the VITA volunteer has finished preparing the return, not during the intake process. This is also a natural point to discuss LITCs if the taxpayer were to owe money for the tax year.

The second challenge is to ensure the taxpayer is properly connected to someone at an LITC. Given that the population of taxpayers who utilize VITA services includes low income and limited English-speaking taxpayers, these individuals may have limitations, so simply providing an email address or phone number for a local LITC might be insufficient. The current official training materials provide no rules regarding how to make a referral. Thus, the official training materials should be revised to include specific rules and best practices regarding how VITA volunteers should reach out to their LITC partners.

The comprehensive volunteer training publication contemplates LITCs and VITA sites will be in contact regarding the procedures for referring taxpayers. It states, “Ideally, tax preparation programs and LITCs will share information and discuss how best to make a referral.” For large, established, or year-round VITA sites, there is a decent chance these discussions are taking place. At other sites, that only have a reason to refer a select number of taxpayers each year, volunteers may be determining in real time how and where to refer the taxpayer. One possible solution is to require site coordinators to annually contact their nearest LITCs about referral procedures. Hopefully, taking this action would form an enduring yet informal partnership between the two organizations, with successful referrals being made in both directions.

VITA sites and LITCs each serve an important role in helping taxpayers meet their tax obligations. Because more complicated tax issues may surface during the tax return preparation process, it is important that the VITA volunteers are able to identify issues beyond scope and to know where to refer a taxpayer in this situation. Communication and training seem to be the key to remedying this problem. In order for taxpayers to fully benefit from these resources, the IRS would be wise to study strengthening the training materials and requiring site coordinators to contact their nearest LITCs so that an informal partnership is formed.

Comments

  1. This is an excellent blog. I volunteered at a VITA site years ago and it was a very satisfying experience. The issue that the blogger did not address is that the supervisor at the VITA site needs to be an experienced practitioner that can recognize the situations referred to. It can be a teaching opportunity for VITA volunteers that many are fledging EA or CPA candidates. As a Past President of the National Association of Enrolled Agents, we recognize the value of VITA and support its expansion.

  2. Mr. Burton Smoliar says

    Low Income Taxpayer Clinics are precluded from preparing returns for the current year. Many issues that arise in preparing a return are listed as beyond scope in training materials. An example is cancelled debt income that can be excluded on the basis of insolvency. Low Income Taxpayer Clinics should be enabled to do returns in these cases.

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