Section 1 Short title
This Act may be cited as the “Volunteer Income Tax Assistance (VITA) Act”.
Volunteer Income Tax Assistance (VITA) Act
A BILL
To facilitate nationwide availability of volunteer income tax assistance for low-income and underserved populations, and for other purposes.
Sec. 2 Findings
Congress makes the following findings:
Community Volunteer Income Tax Assistance (VITA) programs offer tax preparation and related financial services, free of charge, to middle- and low-income individuals and families. The majority of individuals served by VITA programs have annual household earnings below $54,000.
During the 2016 Federal income tax filing season, VITA programs filed more than 3,800,000 Federal income tax returns. This included more than 714,000 returns for the earned income tax credit (EITC), helping program recipients claim approximately $1,100,000,000 in earned income tax credits on their Federal tax refunds. One in every five taxpayers who were eligible to claim the EITC failed to do so.
VITA programs assist underserved taxpayers, including low-wage workers, persons with disabilities, the elderly, Native Americans, rural populations, and taxpayers with limited English proficiency.
In 2016, clients of VITA programs electronically filed their tax returns at a much higher rate (96.5 percent) than the general population (86.4 percent).
Electronic returns cost the Internal Revenue Service considerably less to process ($0.22 per return) than paper returns ($4.09 per return).
The high rate of electronic filing by VITA programs saves the Internal Revenue Service millions of dollars each year.
An Internal Revenue Service survey has shown that very low-income taxpayers are twice as likely as the general population to visit a Taxpayer Assistance Center and half as likely to use the Internal Revenue Service Web site. Volunteer tax preparation programs serve as an accessible and cost-effective alternative to other Internal Revenue Service channels.
Internal Revenue Service estimates from fiscal year 2005 found that the volunteer preparation program cost $12.01 per contact, while Taxpayer Assistance Centers and assisted toll-free calls averaged $28.73 and $19.46 per contact, respectively.
The number of tax returns prepared by the VITA program increased 100 percent between the 2014 (1,900,000 returns) and 2016 (3,800,000 returns) tax filing seasons.
During tax filing season 2016, 298 organizations applied to the Internal Revenue Service seeking more than $24,300,000 in grant funding through the VITA program, an amount which was more than double the available resources, and 210 organizations received grants at a median grant of approximately $40,000.
Sec. 3 Definitions
As used in this Act:
Qualified return preparation program— The term “qualified return preparation program” means any program—
which provides assistance to individuals, not less than 90 percent of whom are low-income taxpayers, in preparing and filing Federal income tax returns, including schedules reporting sole proprietorship or farm income,
which is administered by a qualified entity,
in which all of the volunteers who assist in the preparation of Federal income tax returns meet the training requirements prescribed by the Secretary, and
which uses a quality review process which reviews 100 percent of all returns.
Qualified entity—
In general— The term “qualified entity” means any entity which—
is described in subparagraph (B),
is in compliance with Federal tax filing and payment requirements,
is not debarred or suspended from Federal contracts, grants, or cooperative agreements, and
agrees to provide documentation to substantiate any matching funds provided under the VITA grant program.
Entity described— An entity is described in this subparagraph if such entity is—
an institution of higher education which is described in section 102 (other than subsection (a)(1)(C) thereof) of the Higher Education Act of 1965 (20 U.S.C. 1088), as in effect on the date of the enactment of this Act, and which has not been disqualified from participating in a program under title IV of the Higher Education Act of 1965,
an organization described in section 501(c) of the Internal Revenue Code of 1986 and exempt from tax under section 501(a) of such Code,
a State or local government agency, including—
a county or municipal government agency,
an Indian tribe, as defined in section 4(13) of the Native American Housing Assistance and Self-Determination Act of 1996 (25 U.S.C. 4103(13)), including any tribally designated housing entity (as defined in section 4(22) of such Act (25 U.S.C. 4103(22))), tribal subsidiary, subdivision, or other wholly owned tribal entity, and
a State government agency, but only if no other entity described in this subparagraph is available to assist the targeted population or community,
a local, State, regional, or national coalition (with one lead organization which meets the eligibility requirements of clause (i), (ii), or (iii) acting as the applicant organization), or
a Cooperative Extension Service office, but only if no other entity described in this subparagraph is available to assist the targeted population or community.
Low-income taxpayers— The term “low-income taxpayer” means a taxpayer who has an income which does not exceed 250 percent of the poverty level, as determined in accordance with criteria established by the Director of the Office of Management and Budget.
Underserved population— The term “underserved population” includes populations of persons with disabilities, persons with limited English proficiency, Native Americans, individuals living in rural areas, and the elderly.
Lead national organization— The term “lead national organization” means an organization described in section 501(c) of the Internal Revenue Code of 1986 and exempt from tax under section 501(a) of such Code which has demonstrated, to the satisfaction of the Secretary—
capacity in a minimum of 15 States, territories, or tribal areas,
expertise in the provision of tax preparation services to low-income taxpayers and underserved populations,
an ability to train program leadership and staff,
capacity to disseminate information throughout the United States, and
capacity to—
maintain a Web site through which information is disseminated in an easily accessible manner, and
provide technical assistance and training through Web-based technologies.
Secretary— The term “Secretary” means the Secretary of the Treasury or the Secretary’s delegate.
Sec. 4 Grants to facilitate nationwide availability of volunteer income tax assistance for low-income and underserved populations
In general— The Secretary, through the Internal Revenue Service, shall establish a Community Volunteer Income Tax Assistance Matching Grant Program (hereinafter in this section referred to as the “VITA grant program”). Except as otherwise provided in this section, the VITA grant program shall be administered in the same manner as the Community Volunteer Income Tax Assistance matching grants demonstration program established under title I of division D of the Consolidated Appropriations Act, 2008.
Matching grants—
In general— The Secretary shall make available grants under the VITA grant program to provide matching funds for the development, expansion, or continuation of qualified return preparation programs assisting low-income taxpayers and members of underserved populations.
Application— In order to be eligible for a grant under this section, a qualified return preparation program shall submit an application to the Secretary at such time, in such manner, and containing such information as the Secretary may reasonably require for each fiscal year.
Priority— In awarding grants under this section, the Secretary shall give priority to applications—
demonstrating assistance to low-income taxpayers, with emphasis on outreach to and services for persons with an income at or below 250 percent of the Federal poverty level, as determined in accordance with criteria established by the Director of the Office of Management and Budget,
demonstrating taxpayer outreach and education around available income supports and refundable credits such as the earned income tax credit under section 32 of the Internal Revenue Code of 1986, and
demonstrating specific outreach and focus on one or more underserved populations.
Use of funds— Qualified return preparation programs receiving a grant under this section may use the grant for—
ordinary and necessary costs associated with program operation in accordance with Cost Principles Circulars as set forth by the Office of Management and Budget,
outreach and educational activities relating to eligibility and availability of income supports available through the Internal Revenue Code of 1986, such as the earned income tax credit, and
services related to financial education and capability, asset development, and the establishment of savings accounts in connection with tax return preparation.
Duration of grants—
In general— Except as provided in subparagraph (B), a grant awarded under this section shall be for a period of 1 year and shall not be renewed other than through an application under paragraph (2).
Extended grants— The Secretary may award a grant under this section for a period of not more than 3 years to any qualified return preparation program which—
received a grant under this section for the preceding year, and
received a score of 90 percent or better on a technical evaluation.
Promotion and referral—
Promotion— The Secretary shall promote the benefits of, and encourage the use of, tax preparation through the Volunteer Income Tax Assistance program through the use of mass communications, referrals, and other means.
Internal revenue service referrals— The Secretary may refer taxpayers to qualified return preparation programs receiving funding under this section.
VITA grantee referral— Qualified return preparation programs receiving a grant under this section are encouraged to refer, as appropriate, to local or regional Low Income Tax Clinics individuals who are eligible to receive services at such clinics.
Authorization of Appropriations—
In general— For each of fiscal years 2017, 2018, 2019, 2020, and 2021, there are authorized to be appropriated $30,000,000 to carry out the purposes of this section.
Reservation— From the funds appropriated under paragraph (1) for any fiscal year, the Secretary shall reserve not more than 3 percent for administration of the program.
Availability— Amounts appropriated pursuant to the authority of paragraph (1) shall remain available without fiscal year limitation until expended.
Sec. 5 National center To promote quality, excellence, and evaluation in volunteer income tax assistance
National center To promote quality, excellence, and evaluation in volunteer income tax assistance—
Establishment— There is hereby established the National Center to Promote Quality, Excellence, and Evaluation in Volunteer Income Tax Assistance (hereinafter in this section referred to as the “Center”).
Purpose— The Center shall—
promote the adoption of a universally accessible volunteer training platform for the preparation of Federal income tax returns,
provide capacity-building technical assistance to qualified return preparation program managers,
identify and disseminate best practices related to tax site management emerging from States, community-based organizations, nonprofit providers, and local government entities,
support outreach and marketing efforts to encourage the use of qualified return preparation programs receiving funding under section 4, and
provide evaluation of programs and activities funded under this Act, including—
identification, both in aggregate and disaggregate, of gaps in services for low-income taxpayers and underserved populations, and
independent evaluation of progress toward program objectives, as defined by the Secretary.
Administration—
In general— The Secretary shall—
designate, through a competitive process, one qualified entity to be the lead national organization, and
provide an annual grant to the lead national organization designated under clause (i).
Duties of lead national organization— The lead national organization shall use funds provided through the grant in subparagraph (A)(ii) to—
carry out the purposes of the Center, and
make subgrants as provided in subsection (b).
Subgrants—
In general— The lead national organization shall make available subgrants to eligible organizations to facilitate specialized technical assistance in reaching one or more underserved populations.
Eligible organization— For purposes of this subsection, the term “eligible organization” means any organization which—
is described in section 501(c) of the Internal Revenue Code of 1986 and exempt from tax under section 501(a) of such Code,
has, to the satisfaction of the lead national organization, demonstrated expertise and evidenced-based practices in specialized outreach to, and service of, one or more underserved populations, and
has, to the satisfaction of the lead national organization, demonstrated expertise in the provision of specialized technical assistance relating to qualified return preparation programs for one or more targeted underserved populations.
Application— In order to be eligible for a subgrant under this subsection, an eligible organization shall submit an application to the lead national organization at such time, in such manner, and containing such information as the lead national organization may reasonably require for each fiscal year.
Use of funds— An eligible organization which receives a subgrant under this subsection shall assist the Center by—
providing technical assistance to qualified return preparation programs with targeted outreach and assistance to one or more underserved populations, and
including strategies for the provision of technical assistance targeting individuals and families with annual household earnings at or below 250 percent of the poverty line within the underserved populations served by the subgrant.
Subgrant amount—
In general— Each year, the lead national organization shall make available subgrants which, in the aggregate, do not exceed 40 percent of the grant received under subsection (a).
Underserved populations— Of the amount of subgrants provided under subparagraph (A)—
not less than 25 percent shall be dedicated to specialized technical assistance in serving taxpayers with disabilities,
not less than 25 percent shall be dedicated to specialized technical assistance in serving limited English speaking taxpayers, and
not less than 25 percent shall be dedicated to specialized technical assistance in serving Native American taxpayers.
Duration of subgrants— A subgrant awarded under this subsection shall be for a period of 1 year and shall not be renewed other than through an application under paragraph (3).
Authorization of Appropriations—
In general— For each of fiscal years 2017, 2018, 2019, 2020, and 2021, there are authorized to be appropriated $5,000,000 to carry out the purposes of this section.
Availability— Amounts appropriated pursuant to the authority of paragraph (1) shall remain available without fiscal year limitation until expended.
Sec. 6 National service programs to provide tax preparation assistance
in paragraph (12), by striking “and” at the end;
in paragraph (13), by striking the period and inserting “; and”; and
by adding at the end the following:
“(14) in connection with tax preparation assistance programs for low-income and older individuals and families, particularly Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs.”
National Service Senior Corps— Section 225(b) of the Domestic Volunteer Service Act of 1973 (42 U.S.C. 5025(b)) is amended by adding at the end the following:
“(17) Programs that promote financial literacy and financial empowerment, such as through providing tax preparation assistance to low-income or elderly individuals.”
AmeriCorps— Section 122(a)(5)(B) of the National and Community Service Act of 1990 (42 U.S.C. 12572(a)(5)(B)) is amended—
in clause (x), by striking “and” at the end;
by redesignating clause (xi) as clause (xii); and
by inserting after clause (x) the following:
“(xi) carrying out tax preparation assistance programs for low-income and older individuals and families, particularly Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs; and”
National Civilian Community Corps— Section 157(a)(1) of the National and Community Service Act of 1990 (42 U.S.C. 12617(a)(1)) is amended by striking “urban and rural development” and inserting “rural and urban development, including improving financial capabilities of urban residents through tax assistance programs”.
Social innovation funds pilot program— Section 198K(f)(3) of the National and Community Service Act of 1990 (42 U.S.C. 12653k(f)(3)) is amended—
in subparagraph (G), by striking “or” at the end;
in subparagraph (H), by adding “or” at the end; and
by adding at the end the following:
“(I) financial literacy for low-income and older individuals and families, particularly through assisting low-income and older individuals and families with tax preparation;”
Notification from the Internal Revenue Service—
In general— The Secretary of the Treasury, acting through the Commissioner of Internal Revenue, shall provide notification to any eligible organization (as defined in paragraph (3)), at such time and in such manner as is determined appropriate by the Secretary, that such organization may be eligible for additional assistance through programs which are administered by the Corporation for National and Community Service, including—
the National Service Trust program under subtitle C of title I of the National and Community Service Act of 1990 (42 U.S.C. 12571 et seq.);
the National Civilian Community Corps Program under subtitle E of title I of the National and Community Service Act of 1990 (42 U.S.C. 12611 et seq.);
the Volunteers in Service to America program under part A of title I of the Domestic Volunteer Service Act of 1973 (42 U.S.C. 4951 et seq.);
the Social Innovation Funds grant program under part III of subtitle H of title I of the National and Community Service Act of 1990 (42 U.S.C. 12653k);
the Volunteer Generation Fund program under section 198P of the National and Community Service Act of 1990 (42 U.S.C. 12653p); and
the National Senior Service Corps programs, including the Retired and Senior Volunteer Program, under title II of the Domestic Volunteer Service Act of 1973 (42 U.S.C. 5000 et seq.).
Notification— The notification described in paragraph (1) shall provide resources for eligible organizations to apply to programs described in such paragraph and direct such organizations to materials available on the public website of the Corporation for National and Community Service. The Chief Executive Officer of the Corporation for National and Community Service (or the Chief Executive Officer's designee) shall prepare those resources and materials.
Eligible organization— The term eligible organization means—
a qualified entity which administers a qualified return preparation program that receives or has received a grant from the Commissioner of Internal Revenue; or
an organization which enters into or has entered into an agreement with the Secretary of the Treasury under section 163 of the Revenue Act of 1978 (26 U.S.C. 7804 note) to provide tax counseling assistance for elderly individuals in the preparation of their Federal income tax returns.
Matching funds requirements— Section 121(e)(2) of the National and Community Service Act of 1990 (42 U.S.C. 12571(e)(2)) is amended by striking “laws)” and inserting “laws, but including funds made available under the Community Volunteer Income Tax Assistance Matching Grant Program established under section 4 of the Volunteer Income Tax Assistance (VITA) Act.”.