TIGTA: IRS Must Ensure That Volunteer Income Tax Assistance Is Given Only To Eligible Taxpayers (200,000 Returns Were Prepared For Ineligible Taxpayers, Including Four With AGIs > $1 Million)

The Treasury Inspector General for Tax Administration has released Improvements Are Needed to Ensure That the Volunteer Income Tax Assistance Grant Program Extends Tax Return Preparation to Underserved Populations (2017-40-088):

TIGTA’s review of the almost 4.5 million tax returns prepared by grantees during Grant Years 2014 through 2016 identified that: 1) volunteers prepared 201,572 (4 percent) returns with an Adjusted Gross Income amount that exceeded the income threshold set for free tax return preparation, including 34,371 returns with an Adjusted Gross Income greater than $100,000 and 11 returns with an Adjusted Gross Income exceeding $1 million; 2) the IRS could not verify if 456,220 (10 percent) tax returns with complex tax schedules were prepared by volunteers with advanced certifications; and 3) 15,402 returns were out of scope. Finally, some guidelines and procedures were not current or consistent.

TIGTA recommended that the IRS 1) develop procedures to measure the extent to which the VITA Grant Program increases coverage to underserved populations; 2) identify and communicate with grantees preparing a high percentage of tax returns over the VITA Program income tolerance level to ensure that funds are expended in compliance with congressional intent; 3) ensure that grantees have processes and procedures to confirm that only volunteers with advanced certifications prepare complex tax returns; and 4) ensure that VITA Grant Program internal guidelines are consistent with publications for VITA grantees.