TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION
Accuracy of Volunteer Tax Returns Continues to Improve, but Better Controls Are Needed to Ensure Consistent Application of Procedures and Processes
September
18, 2008
Reference Number: 2008-40-177
This report has cleared the Treasury Inspector General for Tax Administration disclosure review process and information determined to be restricted from public release has been redacted from this document.
Phone Number |
202-622-6500
Email Address | inquiries@tigta.treas.gov
Web Site |
http://www.tigta.gov
September 18, 2008
MEMORANDUM FOR COMMISSIONER, WAGE AND INVESTMENT DIVISION
FROM: Michael R. Phillips /s/ Michael R. Phillips
Deputy Inspector General for Audit
SUBJECT: Final Audit Report – Accuracy of Volunteer Tax Returns Continues to Improve, but Better Controls Are Needed to Ensure Consistent Application of Procedures and Processes (Audit # 200840010)
This report presents the results of our review to determine
whether taxpayers receive quality service, including the accurate preparation
of their income tax returns, when visiting Internal Revenue Service (IRS)
Volunteer Program[1]
sites. We also determined whether the
IRS makes adequate efforts to ensure the integrity of the volunteers
participating in the Volunteer Program. This
audit is a followup to prior Treasury Inspector General for Tax Administration
reviews and is part of our Fiscal Year 2008 Annual Audit Plan.[2]
Impact on the Taxpayer
The Volunteer Program plays an increasingly important role in achieving the IRS’ goal of improving taxpayer service and facilitating participation in the tax system. It provides no-cost Federal tax return preparation and electronic filing directed toward underserved segments of individual taxpayers, including low-income to moderate-income, elderly, disabled, and limited‑English‑proficient taxpayers. Although accuracy rates for tax returns prepared by volunteers have increased from those in prior years, the quality assurance process is still not consistently followed. Incorrectly prepared tax returns can increase the risk of taxpayers receiving erroneous tax refunds by not receiving credits to which they are entitled or receiving additional credits for which they do not qualify.
Synopsis
Our reviews over the last five filing seasons[3] have determined that accuracy rates for tax returns prepared at Volunteer Program sites have continued to increase and improvements have been made to the oversight of the Volunteer Program. However, to ensure sustained success in the Volunteer Program, the IRS must continue to focus on improving the quality of the tax return preparation process.
Accuracy
rates of tax returns prepared for our auditors increased from 0 percent in the
2004 Filing Season to 69 percent in the 2008 Filing Season.
Of the 36 tax returns prepared for our auditors by Volunteer Income Tax Assistance and Tax Counseling for the Elderly sites in the 2008 Filing Season, 11 (31 percent) were prepared incorrectly. If 9 of these incorrectly prepared tax returns had been filed, taxpayers would not have received almost $4,700 in tax refunds to which they were entitled. Alternatively, if the remaining 2 incorrectly prepared tax returns had been filed, the IRS would have incorrectly refunded almost $6,000.
Since the 2004 Filing Season, we have reported that volunteers are not following required procedures designed to assist in the accurate preparation of tax returns. During the 2008 Filing Season, some volunteers did not consistently use the required intake and interview process or perform a quality review to ensure that an accurate tax return was prepared.
For the 11 tax returns incorrectly prepared, 1 or more requirements were not followed. For example:
Improvements are also needed to the Return Reviews used to monitor Program effectiveness. Return Reviews are unannounced IRS visits to volunteer sites to evaluate tax law and tax return accuracy. Test results showed that quality review procedures were not consistently followed from site to site. In addition, our review of 91 Return Review cases showed that 43 (47 percent) had missing or illegible documents. Therefore, we could not validate the accuracy of those tax returns. In addition, of the 91 cases sampled, only 19 (21 percent) included the most recent version of the Quality Return Review Sheet (Form 6729C).
The Stakeholder Partnerships, Education, and Communication (SPEC) function continues to show a commitment to improving the Volunteer Program return preparation process to ensure the accurate preparation of tax returns. Accurate tax return preparation establishes credibility and validates the integrity of the Program and its volunteers. The IRS also has application processes and procedures in place to ensure that volunteer applicants meet certain criteria and are trained. However, these steps and processes do not ensure the integrity of volunteers, even though the volunteers have access to taxpayers’ personal identifiable information such as Social Security Numbers, driver licenses, and home addresses.
Finally, some volunteer sites offer Refund Anticipation Loans (RAL or Loan).[4] However, little oversight for these Loans is offered through the Volunteer Program. The IRS could not provide the number of Volunteer Program sites or a list of sites that offer RALs. In addition, the Program volunteers cannot input RAL indicators on taxpayer accounts for those who applied or obtained the Loans, which is a requirement for commercial tax preparation companies.
Recommendations
We recommended that the Commissioner, Wage and Investment
Division, 1) require that the Return
Review process be well documented so that external
reviews can be conducted and results can be measured, 2) ensure that all Volunteer Agreement Standards of
Conduct – VITA/TCE[5] Programs (Form 13615) are signed and dated by volunteers
prior to the start of their service, and 3) revise Form 13615 to include a question to determine
whether the applicant has been convicted of a crime, have the applicant sign
the Form under the penalty of perjury, and conduct a study to evaluate the applicability
and feasibility of standards used by other volunteer organizations.
We also recommended
that the Commissioner, Wage and Investment Division, 4) include a requirement
in the Volunteer Program Sponsor Agreement (Form 13533) that applicants
document whether they will be offering RALs, including details of the Loans offered, 5) ensure that
volunteers are able to input the RAL indicator when transmitting the tax returns
to the IRS and that the indicator is
included on the management information system used to control the Volunteer
Program, and 6) include a review of RALs in site visits to ensure that the
Loans are being offered and filed consistently with written guidance issued by
the IRS.
Response
IRS management agreed with four of our six recommendations, partially agreed with one (Recommendation 3), and disagreed with one (Recommendation 5). Concerning the six recommendations:
1) The SPEC function will implement a Centralized Return Review Cadre during the 2009 Filing Season to ensure that consistent quality reviews are performed and will implement procedures to ensure that the Return Review process is well documented.
2) The SPEC function will place appropriate emphasis on volunteers signing and dating Form 13615 prior to the start of their service.
3) The SPEC function will not immediately revise Form 13615. However, it will discuss this issue with its partners (volunteer organizations) because the volunteers supporting Volunteer Income Tax Assistance and Tax Counseling for the Elderly Programs work for them and not directly for the IRS.
4) The SPEC function will add a question to Form 13533 to identify other products and services being offered by volunteer sites and will obtain this information from new sites when they complete a Form 13533. It will include a similar question in the site review process with respect to existing partners. If RALs are offered, the SPEC function will request information from the partner regarding the fees, interest rate charged, financial institution(s) involved, and marketing products/strategies.
5) The
IRS did not agree with the recommendation, stating that if the SPEC function
turned on the RAL indicator in
the commercial software used by volunteers to prepare tax returns, the
downstream impact to partners and their established processes might be
negative. The IRS software contract
would have to be modified because activation of the RAL indicator is precluded
by the current contract. Activating the
RAL indicator would result in additional costs.
All of these factors must be thoroughly investigated and analyzed and
any risks must be identified before the IRS can determine whether this action
will provide the desired results. However,
the SPEC function will request changes to its management information system to
add a field that can be used to identify sites offering RALs.
6) The IRS agreed that it should monitor preparers, including
volunteer preparers, offering RALs or similar bank products to ensure their
compliance with IRS regulations and procedures.
However, it believes that this should be accomplished within the
parameters of existing oversight programs in its Small
Business/Self-Employed Division.
Management’s complete response to the draft report is
included as Appendix IX.
Office of Audit Comment
IRS
management disagreed with Recommendation 5 that the SPEC function should ensure
that volunteers are able to input the RAL indicator, citing a variety of
procedural and other issues. We agree
that the IRS needs to consider the additional costs and investigate further
before making a final determination.
However, the IRS currently cannot determine which sites offer RALs or the
number of--and/or which--taxpayers visit volunteer sites to obtain RALs. This is necessary to determine the effect of
RALs on the Volunteer Program and to ensure that all procedures and regulations
are followed.
Although the IRS agreed with Recommendation 6, it stated
that overseeing the volunteers offering RALs would be accomplished within the
parameters of an existing program in the Small Business/Self-Employed
Division. We will follow up on this action
during the 2009 Filing Season audit of the Volunteer Program.
Copies of this
report are also being sent to the IRS managers affected by the report
recommendations. Please contact
me at (202) 622-6510 if you have questions or Michael E. McKenney, Assistant
Inspector General for Audit (Wage and Investment Income Programs), at (202)
622-5916.
Improvements
Are Needed to the Return Reviews Used to Monitor Program Effectiveness
Current
Procedures Need to Be Strengthened to Ensure the Integrity of the Volunteers
Some Volunteer
Program Sites Offer Refund Anticipation Loans to Taxpayers
Appendices
Appendix
I – Detailed Objective, Scope, and Methodology
Appendix
II – Major Contributors to This Report
Appendix
III – Report Distribution List
Appendix
IV – General Characteristics of Tax Year 2006 Tax Returns Prepared by the
Volunteer Program
Appendix V
– Cities and States Visited to Have Tax Returns Prepared
Appendix VI –
Results of Tax Returns Incorrectly Prepared at Volunteer Program Sites
Appendix
VII – Accuracy of Eligibility Determinations
Appendix IX –
Management’s Response to the Draft Report
Abbreviations
|
e-file, e-filing |
Electronic
Filing |
|
IRS |
Internal Revenue Service |
|
RAL |
Refund Anticipation Loan |
|
SPEC |
Stakeholder Partnerships,
Education, and Communication |
|
TCE |
Tax Counseling for the Elderly |
|
VITA |
Volunteer Income Tax Assistance |
The Internal Revenue Service (IRS) Volunteer Income Tax Assistance (VITA) Program was originated in 1969 due to enactment of the Tax Reform Act of 1969[6] and an increased emphasis on taxpayer education programs. The IRS has placed continual emphasis on expanding the VITA Program through increased recruitment of social service, nonprofit, corporate, financial, educational, and government organizations; involvement of the military on a national level; and expansion of assistance provided to the limited-English-proficient community.
Accurately prepared tax returns establish
credibility in and the integrity of the Volunteer Program.
The Tax Counseling for the Elderly (TCE) Program provides free tax help to people age 60 and older. The Revenue Act of 1978[7] authorized the IRS to enter into agreements with private or nongovernmental, public, nonprofit agencies and organizations to provide training and technical assistance to volunteers who provide free tax counseling and assistance to elderly individuals in the preparation of their Federal income tax returns. The law authorizes an appropriation of special funds, in the form of grants, to provide tax assistance to persons age 60 and older. The IRS receives the funds as a line item in the budget appropriation. The total funds are distributed to the sponsors[8] for their expenses.
The IRS Volunteer Program includes VITA sites operated in partnership with the military and with various community-based organizations,[9] as well as sites operated by the TCE Program and the AARP. The IRS Stakeholder Partnerships, Education, and Communication (SPEC) function is responsible for providing oversight for the Volunteer Program, which includes determining policies and procedures, developing products and training material, and monitoring and managing Volunteer Program activity. The SPEC function’s concept of operations includes looking for opportunities to assist third parties to help taxpayers understand and meet their tax obligations by promoting collaboration among tax practitioners, commercial preparers, and community-based partners to support the volunteer return preparation program.
This audit included an assessment of tax returns prepared at community-based VITA sites and TCE sites sponsored by the AARP. During the 2007 Filing Season,[10] these sites were involved in the preparation of 2,117,801[11] tax returns. Figure 1 provides a breakdown of the Volunteer Program and the volumes of tax returns prepared during the 2007 Filing Season.
Figure
1: Tax Year 2006 Tax Returns Prepared
by the Volunteer Program
|
Type of Volunteer
Program |
Volume of Tax Returns
Prepared |
Percentage |
|
VITA |
807,793 |
32.84% |
|
Military VITA |
267,976 |
10.90% |
|
Colocated VITA* |
26,168 |
1.06% |
|
TCE (Non-AARP) |
50,821 |
2.07% |
|
TCE (AARP) |
1,283,840 |
52.19% |
|
Other** |
23,153 |
0.94% |
|
Totals: |
2,459,751 |
100.00% |
Source: Our analysis of data retrieved from the IRS
management information system containing
Tax Year 2006 filing information. We
validated these data by accessing selected taxpayer accounts.
* = Community-based VITA sites that
are located in buildings occupied by one or more IRS offices.
** = At the time of our data analysis, some data had
invalid site codes that were categorized
as “Other.”
The Volunteer
Program plays an increasingly important role in achieving the IRS’ goal of
improving taxpayer service and facilitating participation in the tax system. It provides no-cost Federal tax return
preparation and electronic filing (e‑filing) directed toward underserved segments
of individual taxpayers, including low-income to moderate-income, elderly,
disabled, and limited-English-proficient taxpayers. These taxpayers frequently are involved in
complex family situations that make it difficult to correctly understand and
apply the tax law.
In addition, some of the volunteer sites offer Refund Anticipation Loans (RAL or Loan) as a low-cost alternative to traditional RALs. A RAL is a short-term loan provided to a taxpayer in anticipation of his or her current year Federal income tax refund. It is a contract between the taxpayer and a lender, and the IRS is not involved in this contract. The IRS stated that the Loans offered by Volunteer Program partners are lower in fees and interest than those offered through commercial tax preparation services.
The IRS is
establishing a Community VITA Grant Program that will provide direct funds to
enable the IRS to extend its Volunteer Program and services to underserved
populations and hardest-to-reach areas, along with increasing the capacity to
file returns electronically, heighten quality control, enhance volunteer
training, and continue to improve the accuracy rate of returns prepared by VITA
Program sites. The Community VITA Grant
Program will allow the IRS to further expand the Volunteer Program while
continuing its focus on improving tax return accuracy. The Volunteer Program’s growth and success
demonstrate both community commitment to providing services to the underserved
and the tremendous need for such services.
Tax scenarios
used by auditors reflected characteristics of taxpayers who seek assistance
from the Volunteer Program
To ensure that the 2
tax scenarios used in this review reflected the characteristics of taxpayers
who seek assistance from the Volunteer Program, we developed the scenarios
based on tax filing characteristics of the 1,260,624 individuals who used
community-based VITA sites and those under age 60 who used AARP sites to have
their Tax Year 2006 tax returns prepared.
These taxpayers had average earnings of $17,856.31 (community-based
VITA sites) and $22,080.96 (AARP-sponsored
sites). Appendix IV provides additional
key characteristics of these individuals.
Further, we designed
the scenarios to include tax law topics that assessed the volunteers’ use of
the tools the SPEC function had created to ensure that accurate tax returns are
prepared. The two scenarios together included
tax topics related to five of the six credits taxpayers most often claimed on
the Tax Year 2006 returns prepared by community-based VITA and AARP-sponsored
sites. The dollar amount of these 5
credits represented more than 57 percent (approximately $855 million) of the $1.5 billion in refunds shown on the
tax returns for these taxpayers.
Taxpayers whose tax returns include 1 or more of the 5 credits in our
scenarios accounted for 811,094 (38 percent) of the 2,117,801 tax returns
prepared, based on our analysis of all Tax Year 2006 volunteer-prepared tax
returns. The two scenarios developed for
this review were:
Scenario 1 – The taxpayer was divorced and lived with his or her 8-year-old child. The taxpayer had the same job working as a clerk throughout 2007. Wages reported on the Wage and Tax Statement (Form W-2) totaled $28,732. The taxpayer was paid bi-weekly and contributed to a 401(k) retirement plan. The taxpayer received a statement of Interest Income (Form 1099-INT) totaling $42.13, received $400 a month for child support, had dependent care expenses totaling $1,352, and contributed $1,253 to a 401(k) retirement plan.
An accurately prepared tax return would result in the taxpayer receiving a refund of $2,218. The tax return preparer would have correctly determined that the taxpayer’s filing status was Head of Household and the dependency exemption could be claimed. In addition, the taxpayer qualified for an Earned Income Tax Credit of $714, a Child Tax Credit of $1,000, a Child and Dependent Care Credit of $379, and a Retirement Savings Contributions Credit of $125.
Scenario 2 – The taxpayer was single, had never been married, and lived with his or her sister. The taxpayer had two children, ages 7 and 9, who lived with the taxpayer in the home of the taxpayer’s sister during school vacations, including the months of June, July, and August (summer). The children lived with the other parent during the school year. The taxpayer worked a part-time evening job as a clerk and was paid $16,435. The taxpayer’s sister earned $48,000 in 2007. The taxpayer received a Form 1099-INT totaling $26.35. The taxpayer attended college part time, and the cost was paid by the taxpayer’s sister.
An accurately
prepared tax return would result in the taxpayer receiving a refund of
$98. The preparer would have correctly
determined that the taxpayer’s filing status was Single. Because the taxpayer did not provide more
than one-half of the support for the children, he or she could not claim the
children as dependents for Child Tax Credit purposes. The Earned Income Tax Credit would not be
available to the taxpayer because earned income exceeded the maximum allowable
amount and because the children did not live with the taxpayer for more than
one-half of the year.
This review was performed at the IRS Customer Assistance,
Relationships, and Education function in the Wage and Investment Division
Headquarters in
Accuracy Rates Have Increased Significantly; However, the Quality Assurance Process Is Still Not Consistently Followed
Accuracy rates for tax returns prepared at Volunteer Program sites have continued to increase over the last five filing seasons.[13] Figure 2 shows that accuracy rates of tax returns prepared for our auditors have increased from 0 percent in the 2004 Filing Season to 69 percent in the 2008 Filing Season.
Figure 2: Overall Tax Return Accuracy Rates for the 2004-2008 Filing Seasons
Figure 2 was removed due to its size. To see Figure 2, please go to the Adobe PDF version of the report on the TIGTA Public Web Page.
Since the 2004 Filing Season, we have reported that VITA site volunteers are not following required procedures designed to assist in the accurate preparation of tax returns. During the 2008 Filing Season, some volunteers did not consistently use the required intake and interview process, including completion of the IRS Intake and Interview Sheet (Form 13614) or another IRS-approved intake sheet, or perform a quality review to ensure that an accurate tax return was prepared.
Of the 36 tax
returns we had prepared for the 2008 Filing Season, 11 (31 percent) were
prepared incorrectly (69 percent accuracy rate). If 9 of these incorrectly prepared tax
returns had been filed, taxpayers would not have received almost $4,700 in tax
refunds to which they were entitled.
Specific credits not received included the Child Tax Credit, Additional
Child Tax Credit, Child and Dependent Care Credit, Earned Income Tax Credit,
and Retirement Savings Contributions Credit.
Alternatively, if the remaining 2 incorrectly prepared tax returns had
been filed, the IRS would have refunded almost $6,000 incorrectly. Overstated refunds resulted from
taxpayers incorrectly receiving the Child
Tax Credit and Additional Child Tax Credit, dependency exemption, Child
and Dependent Care Credit, and/or Earned Income Tax Credit.[14] Figure 3 shows a 5-year
trend analysis of tax law accuracy at Volunteer Program sites for the tax law
topics included in our 2 scenarios.
Figure 3:
Comparison of Tax Law Accuracy Rates for the
2004-2008 Filing Seasons[15]
Figure 3 was removed due to its size. To see Figure 3, please go to the Adobe PDF
version of the report on the TIGTA Public Web Page.
Furthermore, the
IRS conducts its own shopping reviews.
During the 2008 Filing Season, the IRS performed 85 shopping reviews
that showed 64 (75 percent) tax returns were prepared accurately.
The
SPEC function has continued to improve its oversight of the Volunteer Program
Accuracy rates have improved significantly with the continued and consistent application of the Volunteer Return Preparation Program-Quality Improvement Process. The SPEC function made significant improvements to the Volunteer Program for the 2008 Filing Season. It removed the word “minimum” from the Quality Site Requirements because there is no minimum in quality. The Quality Site Requirements include key aspects of the intake and interview process, reference materials, and quality review process. For example, all sites must:
·
Use an
intake and interview process that includes correctly using an IRS-approved
intake and interview sheet for every tax return prepared.
·
Have Volunteer Resource Guide (Publication
4012) and Your Federal Income Tax (Publication
17) available for use by every volunteer return preparer and quality reviewer.
·
Use a quality
review process, which includes a 100 percent review of all returns. This process must include the use of an
approved quality review checksheet for every tax return.
The IRS continues its commitment to providing top-quality service to all taxpayers who visit Volunteer Program sites, especially low-income to moderate-income, elderly, disabled, and limited-English-proficient taxpayers. Partner organizations and their volunteers are the most valuable resources within the IRS tax return preparation program. The Quality Site Requirements were developed to ensure that VITA and TCE Program sites have a consistent operation in each site. The SPEC function is responsible for providing partners, volunteer site coordinators, and volunteers with the tools and support necessary to comply with each quality requirement. The quality focus is on improving the return preparation process to result in accurate returns. This commitment to accurate return preparation establishes credibility and validates the integrity of the Program and its volunteers.
Some volunteers are still not adhering to required procedures for the accurate preparation of all tax returns
Although our shopping accuracy rate increased significantly from those in prior years, some volunteers are not following all Quality Site Requirements. For each of the 11 tax returns prepared incorrectly, 1 or more elements of the Requirements were not followed. For example:
Quality
service and accurate return preparation start with the volunteer asking the taxpayer the right
questions. Form 13614 assists the volunteer
by ensuring that the right questions are asked during the interview with the
taxpayer. All volunteers must complete
and use Form 13614 to prepare each tax return.
All quality reviewers must use the Form with the supporting documents
during the quality review. The intake and
interview process must include the following at a minimum:
In the Volunteer Program,
an accurate return is the most important aspect of providing quality service to
the taxpayer.
The purpose of the quality review is to ensure that the taxpayer’s tax return is accurate based on the supporting documents provided by the taxpayer and the intake and interview sheet. One of the Quality Site Requirements is to have a quality review process in place and ensure that it is being used at every site on every return. A quality review process includes:
· The taxpayer’s participation.
· Completion of a standardized quality review checksheet, either the Quality Review Sheet [Form 8158 (EN/SP)] or an IRS-approved, partner-developed quality review checksheet containing the same information as that listed on Form 8158 (EN/SP).
·
Use of the available supporting documents to
confirm identity, income, expenses, and credits on the tax return.
A tax return is accurate when the tax law is applied correctly and the return is free from error based on the taxpayer interview and all supporting documentation. If a Volunteer Program site is not in compliance with a particular aspect of the Quality Site Requirements, the SPEC function’s primary goal is to work with the partner and the site to assist them in becoming compliant as soon as possible. Any remedy offered should provide the assistance and support necessary to bring the site into compliance with the Quality Site Requirements. This might include discussions, counseling, and/or mentoring assistance with the site within a reasonable period. Withdrawing IRS support from a site should be the last resort.[16]
During this audit, we provided SPEC function management with observations from our anonymous visits, including specific examples of noncompliance with Quality Site Requirements. Based on our feedback, SPEC function management contacted representatives from the sites to discuss the issues and requested that corrective actions be taken. They also completed followup actions by elevating the issues to be addressed with the partners.
Site
coordinators are volunteers who provide coordination, organization, and
supervision for all aspects of a Volunteer Program site. They play a critical role in the quality at
the individual sites. They also greatly
influence whether volunteers follow and implement the Quality Site Requirements. Information provided to us during discussions with site coordinators and
volunteers associated with the sites that did not perform a quality review or
use a quality review checksheet included the following: 1) the site discontinued using the checksheet
during the filing season, 2) the volunteers know what information to review
when performing a quality review so a quality review checksheet is not needed, or
3) the site eliminated the entire quality review process due to a staff shortage.
The SPEC function also conducted 85 shopping visits during
the 2008 Filing Season as part of its quality review program
The SPEC function results confirm
that some Volunteer Program sites are not consistently complying with the Quality
Site Requirements. Observations from
these shopping visits showed that:
In addition, 12 (33
percent) of the 36 sites we visited did not prepare an intake and interview
sheet correctly, and 3 (8 percent) did not prepare one at all. Eleven (31 percent) did not perform the
required quality review on the prepared tax returns.[17]
Incorrectly prepared
tax returns can increase the risk of taxpayers not receiving credits to which
they are entitled or receiving additional credits for which they do not
qualify. This might also create
additional burden on taxpayers if the IRS later finds potential errors on the
tax returns and requires the taxpayers to face the
demands of IRS audits.
Because we have already reported in prior audit reports that
volunteers do not consistently use the tools to ensure that all tax returns are
prepared accurately, and the accuracy rate is improving, we are making no
recommendations at this time. We will continue
to monitor the IRS’ efforts during next year’s review.
Improvements Are Needed to the Return Reviews Used to Monitor Program Effectiveness
Limited testing at six selected volunteer sites showed that quality review procedures were not consistently followed. Some sites did not use quality review checksheets, did not include economic stimulus payment[18] tax returns for review, and did not verify taxpayer identification.
Return Reviews are unannounced visits to volunteer sites to evaluate tax law and tax return accuracy. During a Return Review, IRS employees randomly select for review three tax returns from those that have gone through the site’s preparation and quality review process but have not yet been signed by the customers. The IRS reviewer uses the Quality Return Review Sheet (Form 6729C) to check the prepared tax return for accuracy with the completed intake and interview sheet, the customer’s supporting documentation, and the completed quality review checksheet.
The SPEC function conducted a statistical sample of 963 Return Reviews during the 2008 Filing Season and determined that 931 (97 percent) tax returns were correct. Of the 963 returns, 59 percent had been subject to a quality review process, and 95 percent included an intake and interview sheet.
Due to an ongoing National Treasury Employees Union issue, reviewers were unable to use scanners to obtain documentation for case files. However, our review of a sample of 91 Return Review cases for which documentation was photocopied as part of the review process showed that 43 cases (47 percent) had missing or illegible documents. Therefore, we could not validate the accuracy of those returns. In addition, of the 91 cases sampled, only 19 (21 percent) included the most recent version of Form 6729C (dated September 2007).
Without complete documentation, we could not determine the quality of the Return Reviews. The importance of obtaining documentation during Return Reviews needs to be emphasized so that independent, third-party reviews can be conducted to ensure that procedures are consistently followed.
Recommendation
Recommendation
1: The Commissioner, Wage and
Investment Division, should require that the Return Review process be well documented, including
using and retaining a review checklist, so that external reviews can be
conducted and results can be measured.
Management’s Response: IRS management agreed with this recommendation. The SPEC function will implement a Centralized Return Review Cadre during the 2009 Filing Season. To ensure that consistent quality reviews are performed, the Cadre will consist of 25 employees specifically trained to perform Return Reviews. Procedures will be implemented to ensure that the Return Review process is well documented. The IRS will capture and retain Return Review documentation for subsequent external review by scanning and electronically storing all documents pertinent to the Review.
Current Procedures Need to Be Strengthened to Ensure the Integrity of the Volunteers
The SPEC function continues to show a commitment to improving the Volunteer Program return preparation process to ensure the accurate preparation of tax returns. Accurate tax return preparation establishes credibility and validates the integrity of the Program and its volunteers. The IRS also has application processes and procedures in place to ensure that volunteer applicants meet certain criteria and are trained.
However, these steps and processes do not ensure the
integrity of volunteers, even though the volunteers have access to taxpayers’
personal identifiable information such as Social Security Numbers, driver
licenses, and home addresses. The Social Security Number is the most widely used identifier
for Federal and State Governments and the private sector. It is used for employment in the
In comparison to other organizations that require potential volunteers to be subject to a background check, the IRS does not require its applicants to undergo a background check. The IRS requires the following to ensure the integrity of its volunteers:
· Privacy and Confidentiality-A Public Trust (Publication 4299). This Publication serves as the central document for providing guidance covering the privacy, confidentiality, and security of all information received at VITA/TCE Program sites.
· Sponsor Agreement (Form 13533). Sponsors must sign Form 13533. New Forms are requested from existing partners (or sponsors) when significant changes are made to Publication 4299. The SPEC function should also obtain a new Form 13533 when key personnel changes occur to ensure that the new individual is aware of the agreement in place.
·
Volunteer Agreement Standards of Conduct – VITA/TCE Programs (Form
13615). Volunteers must annually sign
Form 13615 before their volunteer service begins. These Forms are used to acknowledge receipt
of and/or agreement to maintaining key principles concerning the privacy and
confidentiality of the VITA and TCE Programs.
· Application Package and Guidelines for Managing a TCE Program (Publication 1101). This package contains current TCE Program guidelines. An applicant has to submit a Proposed Program Plan, which should include the steps that will be taken to ensure taxpayer privacy and to maintain the confidentiality of tax returns. In addition to signing the Form 13615, an applicant must sign various additional forms to indicate that he or she is taking all reasonable steps necessary to ensure that information provided by taxpayers remains confidential.
We obtained and reviewed a sample of 30 Forms 13533. Results showed that all 30 Forms were appropriately signed. In addition, review of a sample of 30 volunteer sites with a total of 181 volunteers showed that only 2 volunteers (1 percent) did not sign Form 13615. Review of a sample of 21 Proposed Program Plans for TCE Non-AARP volunteer sites showed that all 21 Plans contained the required narrative to ensure taxpayer privacy and confidentiality and were appropriately dated by the sponsors.
Of the 179 volunteer agreements that were signed, 28 (16 percent) did not contain a signature date or a legible date that we could verify. Because volunteers must sign Form 13615 before they begin their volunteer service, we could not determine if this requirement was met with Forms that had no dates.
Obtaining a signature on the current
sponsor and volunteer agreements might not be sufficient to ensure a
volunteer’s integrity. In comparison,
potential applicants for the IRS e‑file Program[19] are asked to sign the IRS Application
to Participate in the IRS e-file Program (Form 8633), which asks
applicants if they have ever been convicted of a crime, failed to file personal
tax returns or pay tax liabilities, or been convicted of any criminal offense
under the internal revenue laws. If an
applicant provides a “yes” response, he or she must attach an explanation to
the Form 8633. The applicant also signs
the Form 8633 under penalty of perjury.
Recommendations
The Commissioner, Wage and Investment Division, should:
Recommendation
2: Ensure that all Forms 13615 are signed and dated by volunteers prior
to the start of their service.
Management’s
Response:
IRS management agreed with this recommendation. The SPEC function will place appropriate
emphasis on volunteers signing and dating Form 13615 prior to the start of
their service. In addition, this item
will be a subject of discussion during the SPEC function’s Filing Season
Readiness Training.
Recommendation 3: For the short term, revise Form 13615 to include a question to determine
whether the applicant has been convicted of a crime and have the applicant sign
the Form under penalty of perjury. For
the long term, the Commissioner should conduct a study to evaluate the applicability
and feasibility of standards used by other volunteer organizations.
Management’s
Response:
IRS management agreed, in part, with this
recommendation. As stated in the report,
revising Form 13615 to include a question to determine whether an applicant has
been convicted of a crime might not ensure volunteer integrity. The SPEC function will not immediately revise
Form 13615. However, it will discuss
this issue with its partners because the volunteers work for them and not
directly for the IRS. The IRS will
conduct a study with its partners to determine and evaluate the impact of
adding this additional question to Form 13615 and associated requirements of
such a disclosure. As part of this
study, the IRS will work with us to provide any analysis or research performed
in making this recommendation.
Some Volunteer Program Sites Offer Refund Anticipation Loans to Taxpayers
A RAL is a short-term loan secured by a taxpayer’s expected tax refund. While some Volunteer Program sites offer RALs to taxpayers, IRS oversight in this area is insufficient. The SPEC function could not provide the number of Volunteer Program sites or a list of sites that offer RALs. In addition, the VITA Program volunteers cannot input RAL indicators on taxpayer accounts for those who applied for or obtained them when e‑filing the tax returns. When a taxpayer pays a preparer to complete and file a tax return, the IRS requires the preparer to input a RAL indicator on the account before e‑filing the tax return with the IRS.
The IRS stated that the Loans offered by Volunteer Sites are significantly lower in fees and interest and are intended to be an alternative to the higher costs of a traditional RAL. SPEC function management explained that many of their partner organizations have pooled resources to form more than 300 Community-Based Coalitions. As an adjunct to free return preparation, Coalitions often engage financial institutions in their partnerships to provide checking accounts or loans to taxpayers who need them. Some partners and Coalitions have extended these services to provide financial literacy and application assistance with other Federal or State Government programs. IRS partners are realistic about the marketplace and have developed options, including alternative RALs, to meet taxpayer needs and expectations.
Further, while the SPEC function does not endorse or market RALs, it acknowledges the options being offered to its customers. While partners strongly encourage taxpayers to wait for the normal 7-day to 10-day processing period for e-filing and direct deposit, they are ready to offer alternative products to meet the needs of customers with critical financial needs. This additional option, which is rarely used due to significant education efforts by the partners, provides a low-cost alternative to possibly being “victimized” by the traditional for-profit marketplace.
Although the Loan is a contract between the taxpayer and a lender, and the IRS is not involved in this contract, the IRS does monitor Electronic Return Originators[20] for their RAL marketing practices. However, there is currently no monitoring of volunteers who provide these Loans to taxpayers. In addition, SPEC function management explained that the indicator field is blocked and cannot be updated by the volunteers. Without a method to track and control the Volunteer Program RALs, the IRS increases the risks that 1) this aspect of the Volunteer Program is not being monitored for quality performance and 2) regulations are not being consistently followed.
Recommendations
The Commissioner, Wage and Investment Division, should:
Recommendation
4: Include a requirement in the Volunteer Program Form 13533 that
applicants document whether they will be offering RALs at their volunteer sites
and designate those sites. The
applicants should be required to include details of the RALs offered, including
the fees and interest rate charged, financial institution(s) involved, and
marketing of the Loans.
Management’s
Response:
IRS management agreed with this recommendation. The SPEC function will add a question to Form
13533 to identify other products and services being offered by Volunteer
Program sites and will obtain this information from new sites when they
complete a Form 13533. It will include a
similar question in the site review process with respect to existing
partners. If RALs are offered, the SPEC
function will request information from the partner regarding the fees, interest
rate charged, financial institution(s) involved, and marketing products/strategies. The IRS does not wish to endorse RALs or
other bank products by specifically asking if the site offers RALs because the
IRS promotes free income tax preparation.
Recommendation
5: Require that the SPEC function ensure that volunteers
are able to input the RAL indicator when transmitting the tax returns to the
IRS. In
addition, the SPEC function should include this indicator on its management
information system used to control the Volunteer Program.
Management’s Response: IRS management disagreed with the recommendation to ensure that volunteers are able to activate the RAL indicator in the commercial software used by volunteers to prepare tax returns when transmitting tax returns to the IRS. If the SPEC function turned on the RAL indicator at this time, the downstream impact to partners and their established processes might be negative. The IRS software contract would have to be modified because activation of the RAL indicator is precluded by the current contract. Activating the RAL indicator would result in additional applications and fees that could be passed on to the partners and/or taxpayers. Inputting the indicator requires that the partner use the approved banks of the software provider rather than a bank with which the partner might have negotiated lower fees. All of these factors must be thoroughly investigated and analyzed and any risks must be identified before the IRS can determine whether this action will provide the desired results.
The SPEC function will request changes to its management information system (the SPEC Taxpayer Assistance Reporting System) to add a field that can be used to identify sites offering RALs.
Office of Audit Comment: We agree that the
IRS needs to consider the additional costs and investigate further before
making a final determination. However,
the IRS currently cannot determine which sites offer RALs or the number--of
and/or--which taxpayers who visit VITA sites to obtain RALs to determine their
effect on the Volunteer Program and to ensure that all procedures and
regulations are followed.
Recommendation 6:
Ensure that
site visits include a review of RALs to ensure that the Loans are being offered
and filed consistently with written guidance issued by the IRS.
Management’s Response: IRS management
agreed with this recommendation. They
agreed that they should monitor preparers, including volunteer preparers,
offering RALs or similar bank products to ensure their compliance with IRS
regulations and procedures. However, management
believes that this should be accomplished within the parameters of existing IRS
oversight programs. The Small
Business/Self-Employed Division Examination Special Processes function is
responsible for and currently conducts reviews of Electronic Return
Originators, including those that offer RALs.
The reviews are selected from information supplied by an Electronic Tax
Administration function database. The
VITA sites are included in this population and are subject to review. The Small Business/Self‑Employed
Division coordinates its reviews of VITA sites with the local SPEC function Territory Manager. The basic selection criteria used include sites
that file 100 or more returns and have a 25 percent reject rate, or those
for which a complaint has been received.
The presence of a RAL indicator is not part of the selection
criteria. However, if RALs are found to
be offered, a checklist is completed. Because
VITA sites are included in the Small Business/Self-Employed Division Electronic
Return Originator reviews, sufficient oversight exists in this area.
Office of Audit Comment:
Although
the IRS agreed with this recommendation, it stated that overseeing the
volunteers offering RALs would be accomplished within the parameters of an
existing program in the Small Business/Self-Employed Division. We will follow up on this action during the
2009 Filing Season audit of the Volunteer Program.
Appendix I
Detailed Objective, Scope, and Methodology
The overall objective of this review was to determine whether taxpayers receive quality service, including the accurate preparation of their income tax returns, when visiting Volunteer Program[21] sites. We also determined whether the IRS makes adequate efforts to ensure the integrity of the volunteers participating in the Volunteer Program. This review was limited to community-based VITA Program sites and TCE Program sites sponsored by the AARP.[22] To accomplish the objective, we:
I.
Determined
whether Volunteer Program sites were accurately preparing individual income tax
returns based on facts provided by taxpayers.
A.
Selected
a judgmental sample of 36 VITA/Colocated VITA Program[23] and AARP sites nationwide and had tax returns
prepared. We selected sites in 12
cities, with a total of 3 VITA/Colocated VITA Program and AARP
sites being selected in each city. Site
selection was based on the volume of tax returns prepared by the sites, auditor
resources, and the sites’ proximity to major cities. The population of Volunteer Program sites is
not fixed because sites open and close throughout the filing season.[24] Therefore, we could not determine the total
population of Volunteer Program sites and could not select a statistical
sample.[25]
B.
At each
site, an auditor:
1.
Asked to
have his or her individual income tax return prepared using
the information from the scenarios we had prepared to address questions
included on intake sheets or asked by the volunteer preparing the tax return.
2.
Documented
specific information as it relates to the preparation of the tax return.
C.
Determined
whether the tax return prepared by the volunteer was correct.
D.
If a tax
return was prepared incorrectly, determined why the return was prepared
incorrectly and calculated the potential impact on taxpayers and tax revenue.
II.
Assessed
the effectiveness of the IRS process to determine the Volunteer Program
accuracy rate by selecting a judgmental sample of 91 completed Return Reviews from
a total population of 260 Review cases to assess the completeness and accuracy
of the completed Return Reviews. Because
of limited resources, we performed limited
testing of 6 judgmentally selected volunteer sites from a total population of 350 sites included in a Statistics of
Income Division review plan to determine whether quality review procedures were
consistently followed
III.
Assessed
the adequacy of efforts to ensure the integrity of the volunteers participating
in the Volunteer Program. We did not
independently validate the reliability of the IRS data used in this Step
because we did not need to do so to achieve our audit objective. We determined the desired volume of volunteer sites and Proposed Program
Plans required for review and selected a random sample to ensure there was an
equal chance of volunteer sites and Proposed Program Plans being selected
A. Selected a random sample of 30 volunteer sites
from a database with a total population of 11,754 open volunteer sites provided
by the IRS to determine whether a Sponsor Agreement (Form
13533) was signed. The random number
generator in Enterprise Guide was used to generate the random sample.
B.
Selected a random sample of 30
volunteer sites from a database with a total population of 11,754 open
volunteer sites provided by the IRS to determine whether volunteers signed a Volunteer
Agreement Standards of Conduct – VITA/TCE Programs (Form 13615). The random number generator in Enterprise
Guide was used to generate the random sample.
C.
Selected a random sample of 21
Proposed Program Plans for TCE Non-AARP volunteer sites from a database with a
total population of 11,754 open volunteer sites provided by the IRS to
determine whether all Plans contained the required narrative to ensure taxpayer
privacy and to maintain the confidentiality of the tax returns prepared by the
volunteers. The random number generator
in Enterprise Guide was used to generate the random sample.
IV.
Determined whether RALs are offered at Volunteer Program sites.
A. Determined whether the IRS
controlled and tracked the RALs offered at Volunteer Program sites.
B.
Determined the IRS’ oversight of
the RALs offered at Volunteer Program sites.
Appendix II
Major Contributors to This Report
Michael
E. McKenney, Assistant Inspector General for Audit (Wage and Investment Income
Programs)
Augusta
R. Cook, Director
Russell
P. Martin, Director
Roberta
Fuller, Lead Auditor
Pamela
DeSimone, Senior Auditor
Tracy
Harper, Senior Auditor
Robert
Howes, Senior Auditor
Kathy
Coote, Auditor
Jerry
Douglas, Auditor
Mary
Keyes, Auditor
Geraldine Vaughn, Auditor
Appendix III
Commissioner C
Office
of the Commissioner – Attn: Chief of
Staff C
Deputy
Commissioner for Services and Enforcement
SE
National Taxpayer Advocate TA
Deputy
Commissioner, Wage and Investment Division
SE:W
Director, Customer Assistance, Relationships, and Education, Wage and Investment Division SE:W:CAR
Director, Strategy and Finance, Wage and Investment Division SE:W:S
Chief, Performance Improvement, Wage
and Investment Division SE:W:S:PI
Director, Stakeholder Partnerships,
Education, and Communication, Wage and Investment Division SE:W:CAR:SPEC
Chief Counsel CC
Director, Office of Legislative Affairs CL:LA
Director, Office of Program Evaluation and Risk Analysis RAS:O
Office of Internal Control OS:CFO:CPIC:IC
Audit
Liaison: Senior Operations Advisor, Wage and Investment Division SE:W:S
Appendix IV
General Characteristics of Tax Year 2006 Tax
Returns Prepared by the Volunteer Program[26]
|
Type of
Tax Return |
VITA |
TCE (AARP[27]
Under |
|||
|
Tax
Return Volume |
Percentage
|
Tax
Return Volume |
Percentage
of Total |
|
|
|
|
681,703 |
81.74% |
404,410 |
94.78% |
|
|
Income
Tax Return for Single and Joint Filers With No Dependents (Form 1040EZ) |
66,448 |
7.97% |
14,502 |
3.40% |
|
|
|
77,413 |
9.28% |
7,258 |
1.70% |
|
|
|
237 |
0.03% |
27 |
0.01% |
|
|
|
7,515 |
0.90% |
408 |
0.10% |
|
|
|
637 |
0.08% |
58 |
0.01% |
|
|
|
8 |
0.00% |
0 |
0.00% |
|
|
|
VITA |
TCE (AARP Under 60 Years |
|||||
|
Refund Due/ |
Dollar |
Tax Return Volume |
Percentage of Tax
Return Volume |
Dollar |
Tax Return Volume |
Percentage of Tax
Return Volume |
|
|
Refund Due |
$1,012,288,376 |
743,048 |
89.10% |
$486,692,571 |
374,217 |
87.71% |
|
|
Balance Due |
$68,175,600 |
86,231 |
10.34% |
$44,057,205 |
50,946 |
11.94% |
|
|
Breakeven |
$0 |
4,682 |
0.56% |
$0 |
1,500 |
0.35% |
|
|
Filing Status/Dependent
Claims |
VITA |
TCE (AARP Under 60 Years |
||
|
Tax Return Volume |
Percentage of Total |
Tax Return Volume |
Percentage of Total |
|
|
Single |
492,154 |
59.01% |
263,957 |
61.87% |
|
Head of Household |
175,631 |
21.06% |
67,696 |
15.87% |
|
Married Filing
Jointly |
149,602 |
17.94% |
85,710 |
20.09% |
|
Widow(er) With Dependent
Child |
426 |
0.05% |
288 |
0.07% |
|
Married Filing
Separately and Spouse Is Required to File |
16,056 |
1.93% |
8,994 |
2.11% |
|
Married Filing
Separately and Spouse Is Not Required to File |
92 |
0.01% |
18 |
0.00% |
|
Tax Return Prepared
With One or More Dependent Exemptions, Including Parents |
261,940 |
31.41% |
122,147 |
28.63% |
|
Tax Return Prepared
With No Dependent Exemptions |
572,021 |
68.59% |
304,516 |
71.37% |
|
Credits Claimed |
VITA |
TCE (AARP Under 60
Years |
||
|
Tax Return Volume |
Dollar |
Tax Return Volume |
Dollar |
|
|
Earned Income Tax* |
278,119 |
$404,510,906 |
132,401 |
$155,173,913 |
|
Additional Child Tax* |
103,573 |
$93,039,544 |
41,026 |
$38,221,152 |
|
Child Tax* |
95,347 |
$82,879,735 |
52,909 |
$55,556,346 |
|
Retirement Savings
Contributions* |
48,032 |
$7,196,291 |
29,424 |
$4,508,488 |
|
Education |
40,293 |
$25,276,395 |
22,564 |
$14,442,143 |
|
Child and Dependent
Care* |
20,224 |
$9,304,657 |
10,039 |
$4,466,230 |
|
Other (Adoption, Gas,
and Health Coverage Tax) |
163 |
$248,519 |
117 |
$201,164 |
* = This credit was included in our test scenarios.
|
Income |
VITA |
TCE (AARP
Under 60 Years |
||
|
Tax
Return Volume |
Dollar |
Tax
Return Volume |
Dollar |
|
|
Average
Income[28] |
833,961 |
$17,856 |
426,663 |
$22,081 |
|
Other
Income[29] |
31,884 |
$106,409,882 |
16,355 |
$48,863,609 |
Source:
IRS management information system containing all Tax Year 2006 tax
return data.
Appendix V
Cities and States Visited to Have Tax Returns Prepared
·
·
Charlestown/Fall
River/
·
·
·
·
·
·
·
·
·
·
Appendix VI
Results of Tax Returns Incorrectly Prepared at
Volunteer Program[30]
Sites
|
Volunteer Sites Visited |
Type of Site |
Volunteer Site Refund or Balance Due |
Correct Refund or Balance
Due |
Amount of Understated Refund |
Amount of Overstated Refund |
|
|
VITA |
$1,170 |
$2,218 |
-$1,048 |
|
|
|
AARP[31] |
$1,549 |
$2,218 |
-$669 |
|
|
|
AARP |
$1,504 |
$2,218 |
-$714 |
|
|
|
VITA |
$1,504 |
$2,218 |
-$714 |
|
|
|
VITA |
$1,599 |
$2,218 |
-$619 |
|
|
|
AARP |
$1,839 |
$2,218 |
-$379 |
|
|
|
VITA |
$103 |
$98 |
|
$5 |
|
|
VITA |
$2,093 |
$2,218 |
-$125 |
|
|
|
VITA |
$1,818 |
$2,218 |
-$400 |
|
|
|
VITA |
$2,203 |
$2,218 |
-$15 |
|
|
|
VITA |
$6,061 |
$98 |
|
$5,963 |
|
Totals: |
|
|
|
-$4,683 |
$5,968 |
Source:
Anonymous visits performed by our auditors.
Appendix VII
Accuracy of Eligibility Determinations
The
chart was removed due to its size. To
see the chart, please go to the Adobe PDF version of the report on the TIGTA Public
Web Page.[32]
Appendix VIII
Treasury
Inspector General for Tax Administration Audit Reports on the Volunteer Return Preparation
Program
Improvements Are Needed to Ensure Tax Returns
Are Prepared Correctly at Internal Revenue Service Volunteer Income Tax
Assistance Sites (Reference
Number 2004-40-154, dated August 2004).
Significant Improvements Have Been Made in
the Oversight of the Volunteer Income Tax Assistance Program, but Continued
Effort Is Needed to Ensure the Accuracy of Services Provided (Reference Number 2006-40-004, dated November
2005).
Oversight and Accuracy of Tax Returns Continue to Be Problems for the Volunteer Income Tax Assistance Program (Reference Number 2006-40-125, dated August 31, 2006).
Accuracy of Volunteer Tax Returns Is Improving, but Procedures Are Often Not Followed (Reference Number 2007-40-137, dated August 29, 2007).
Appendix IX
Management’s Response to the Draft Report
The
response was removed due to its size. To
see the response, please go to the Adobe PDF version of the report on the TIGTA
Public Web Page.
[1] Includes the Volunteer Income Tax Assistance and Tax Counseling for the Elderly Programs. During this review, the Tax Counseling for the Elderly sites we visited were those sponsored by the AARP (formerly the American Association of Retired Persons).
[2] See Appendix VIII for a list of these prior reports.
[3] The filing season is the period from January through mid-April when most individual income tax returns are filed.
[4] RALs are short-term loans provided to taxpayers in anticipation of their current year Federal income tax refunds. The IRS stated that the RALs offered by Volunteer Program partners are lower in fees and interest than RALs offered through commercial tax preparation services.
[5] VITA – Volunteer Income Tax Assistance. TCE – Tax Counseling for the Elderly.
[6] Pub. L.
No. 91-172, 83 Stat. 487 (codified as amended in scattered sections of 26
U.S.C. and 42 U.S.C.).
[7]
Pub. L. No. 95-600, 92 Stat. 2810.
[8] A sponsor would be an entity similar to the AARP (formerly the American Association of Retired Persons).
[9] Some community-based VITA sites are located in buildings occupied by one or more IRS offices.
[10] The 2007 Filing Season relates to the processing of Tax Year 2006 tax returns. The filing season is the period from January through mid-April when most individual income tax returns are filed.
[11] Total of 833,961 completed at community-based VITA sites and 1,283,840 completed at AARP-sponsored sites.
[12] Of the 36 tax returns, 12 were prepared at AARP-sponsored sites and 24 were prepared at community-based VITA sites.
[13] Prior audits included only community-based VITA sites.
[14] Appendix VI presents details of these results. Appendix VII presents results by tax scenario.
[15] Only tax law topics included in prior followup reviews and this review are included in this comparison (see Appendix VII for a complete list of tax topics addressed in this review).
[16] IRS support includes software, computers, printers, financial assistance, grants, and VITA and TCE Program logo references.
[17] A tax return could be prepared incorrectly though the preparer followed all quality assurance rules. Conversely, a tax return could be prepared correctly though none of the quality assurance rules were followed.
[18] The Economic Stimulus Act of 2008 (Pub. L. No. 110-185, 122 Stat. 613) was passed to provide economic stimulus through recovery rebates to individuals, incentives for business investment, and an increase in conforming and Federal Housing Authority loan limits.
[19] The IRS e-file Program offers taxpayers an alternative to filing a traditional paper tax return. The e-file Program enables taxpayers to send their tax returns to the IRS in an electronic format via an authorized IRS e-file Provider.
[20] Electronic Return Originators originate the electronic submission of income tax returns to the IRS. An Electronic Return Originator electronically submits income tax returns that are either prepared by the Electronic Return Originator’s firm or collected from a taxpayer.
[21] The IRS Volunteer Program includes the VITA and TCE
Programs.
[22] Formerly the American Association of Retired Persons.
[23] Some community-based VITA sites are located in buildings
occupied by one or more IRS offices.
[24] The filing season is the period from January through
mid-April when most individual income tax returns are filed.
[25] See Appendix V for a list of cities and States selected.
[26] The IRS
Volunteer Program includes the VITA and TCE Programs.
[27] Formerly the American Association of Retired Persons.
[28] Average Income was determined in Enterprise Guide by taking the average of the total income of all taxpayers.
[29] Other Income is a line item on the Form 1040 series tax returns that
is not reported on any tax schedules or anywhere else on the tax returns.
[30] The IRS
Volunteer Program includes the VITA and TCE Programs.
[31] Formerly the American Association of Retired Persons.
[32] The IRS
Volunteer Program includes the VITA and TCE Programs. The filing season is the period from January
through mid-April when most individual income tax returns are filed.