July 2014

Acknowledgments

The National Community Tax Coalition (NCTC) NFP and the Center for Economic

Progress (CEP) are truly grateful to the JPMorgan Chase Foundation for funding

the Virtual Volunteer Income Tax Assistance (VITA) pilot program. We also thank all

the volunteers and staff of United Way of Tucson and Southern Arizona and Asset

Independence Coalition and Michigan Capital-Area United Way, as well as all CEP staff

members and volunteers who worked to improve how we serve working families.

Photos are courtesy of the Asset Independence Coalition & Michigan Capital Area United Way.

Copyright 2014, Center for Economic Progress. All rights reserved.

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VITA partners recognize the need to find more cost-effective ways to meet

growing demand as resources continue to shrink. Despite serving more than

three million tax filers in 2013, more than 50 million taxpayers who qualified

for Volunteer VITA were not served primarily due to the spatial mismatch

between location and capacity.

At the national level, an expanding model may prove to address this issue:

Virtual VITA. In the Virtual VITA model, technology connects a filer with an off-

site VITA tax preparer. The filers intake documents are scanned and securely

stored, and depending on the service delivery, the tax return either is then

completed in real time or dropped off for pick up by the client at a later

date.

Compared to traditional VITA, Virtual VITA can require fewer frontline

resources to implement. Also, among key findings from the Head Start

Virtual VITA pilot in New York, the average cost per return completed for the

Virtual VITA program was half the average cost per return completed for

the traditional VITA program.

Though more work is needed to build Virtual VITA to a scalable solution, the

model offers a promising way to deliver free tax preparation, expand the

program to a wider group of social service providers, and successfully meet

community needs.

IntroductionThe Virtual Volunteer Income Tax Assistance (VITA) pilot program used technology to connect low- and-moderate-income taxpayers with critical tax preparation services free of charge, without requiring them to be present with the preparer and wait hours at a traditional community-based VITA site.

This report highlights findings from the program. The grant recipient was the National Community Tax Coalition (NCTC). NCTC was a limited liability company and a subsidiary of CEP until October 1, 2013, upon which NCTC NFP became its own entity.

Tucson, Ariz., and Lansing, Mich., were chosen as the pilot program locations. Respectively, the United Way of Tucson and Southern Arizona (UWTSA) and the Asset Independence Coalition (AIC) administered the program.

BackgroundCommunity organizations that provide free tax preparation serve a crucial role in meeting the needs of thousands of low-income families and individuals each year.

Independent of NCTC, CEP also administered a Virtual VITA pilot. One of the nations largest and most established providers of free VITA services to low-wage families, CEP has operated under the auspices of the IRS VITA program for 20 years. Since 1994, CEP has prepared more than 350,000 tax returns, helping Illinois residents receive over $530 million in tax refunds and credits.

The most common free tax preparation

service is the traditional VITA model of

one-on-one in-person filing assistance.

Despite reliance largely on unpaid

volunteers, the traditional VITA model can

be costly, requiring rented or donated

space, additional paid staff, computers, and

supplies. Moreover, funding to support this

model has constricted in recent years.

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Models Asset Independence Coalition & Michigan Capital Area United WayThe sub grantee serves families in very rural areas of Michigan who live in tax prep deserts and would not otherwise have access to free or low cost tax and financial services.

Launched mid-way through the 2014 tax season (on March 1), the initial concept was that the income tax preparation appointment would be virtual but happen in real time with the client. The idea was to alleviate volunteer availability and capacity issues and also help the client understand more about the return because they could watch the preparation, while bringing additional free tax preparation resources to areas that desperately need them.

Accounting students who were certified VITA volunteers at Northern Michigan University (NMU), in Marquette, Mich., served as the intake site. Accounting students who were certified VITA volunteers at Michigan State University (MSU), in Lansing, and Olivet College, located in Olivet, served as the tax preparers.

By April 1, the Asset Independence Coalition (AIC) only served 14 clients through the Virtual VITA program. It was discovered:

Potential clients were put off by the Virtual VITA consent form and did not like the idea of their return being prepared by volunteers in a different city.

Some clients thought they would have to do their own return (despite volunteers assurance to the contrary).

Clients preferred to wait (sometimes for more than an hour) rather than have their returns prepared virtually.

The word virtual was a huge stumbling block and created anxiety, misunderstanding and distrust with our clients.

As a result, AIC took action and changed strategy, immediately converting to a drop-off program. The intake interview and documents scanning occurred at NMU, and the returns were prepared at MSU and/or Olivet, but no longer in real time. Other changes included:

Having clients sign the Virtual VITA release form when they picked up their taxes, rather than before.

Not using the word virtual in our interactions with the clients.

Once the change took place, the program gained traction. By the end of the 2014 tax season, a total of 78 tax returns were

completed and filed (61 were federal returns and the rest were credit only, prior year or City only). The goal of 200 returns set by NCTC was not reached; however, that number was ambitious from the outset, given the extremely rural area with a small population and late start date.

Considering the initial challenges, the sub grantee was pleased with what was accomplished after changing the program mid-season. The IRS Territory Manager recognized the program as an innovative model and it was presented at the statewide VITA learning exchange to rave reviews.

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Number of Clients 78

Number of Federal Returns Prepared 61

Federal Returns w/ EITC 49 Value of Federal EITC $94,262

Average Adjusted Gross Income $22,719 Total Refund Value $231,422

Asset Independence Coalition & Michigan Capital Area United Way

Models United Way of Tucson and Southern Arizona (UWTSA)UWTSA facilitates and leads the VITA Task Force of Arizona, a collaborative that operates VITA in 10 of Arizonas 15 counties and is the single largest tax preparer in the state.

The previous paper-based, drop-off model (taxpayers original documents were collected at the intake site for preparation at a different physical location) was not well received and ultimately unsuccessful for a number of reasons:

There was a lack of confidence in the model due to the need for taxpayers to leave documents with volunteers and confusion surrounding the word virtual.

There was a lack of the human element associated with the traditional, in-person preparation model.

As a result, the model was reworked and rebranded for the 2014 tax season:

It was strategically renamed Valet VITA to avoid confusion with the previous model, eliminate the negative connotation related to the word virtual, associate the service with a positive experience, and help convey the process.

A new volunteer position, Interview Specialist, was created to allow for more taxpayer interaction and reintroduce the human element.

New scanning equipment and secure cloud technology were utilized to allow taxpayers to leave the intake site with their documents in hand, thereby increasing a sense of security and trust.

Valet VITA was offered at ten VITA sites throughout Southern Arizona during the 2014 tax season. Of those, two offered Valet VITA exclusively. A total of 271 returns were completed and filed. The majority were e-filed.

Despite that success, three new concerns arose:

The length of time needed to prepare returns through the Valet VITA model. Due to overwhelming response, the 7-10 day turnaround often could not be maintained. Also, clients at hybrid sites (offering both traditional and Valet VITA) frequently preferred waiting to file their return that same day.

The considerable amount of monitoring of the cloud storage technology required to maintain quality service.

Effective communication between taxpayers and volunteers/staff regarding the Valet VITA process. It was found that once the intake process was complete, many taxpayers contacted VITA volunteers or staff with follow-up questions that could have been easily answered and addressed during intake.

Its Valet VITA model, piloted in 2014, aimed to ensure that no eligible taxpayer would be turned away due to time constraints or volunteer availability. Valet VITA was conceptualized in response to negative feedback concerning a former Virtual VITA model that was introduced during the 2013 tax season.

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Models Center for Economic Progress (CEP)CEP is one of the nations largest and most established organizations providing free tax preparation and financial services to low-wage families under the auspices of the IRS VITA program. Recognized as a model program nationally, its free tax services reach approximately 17,000 households per year in throughout the Chicago area, collar counties, and in select downstate locations. Services are offered to individuals earning up to $25,000 and families earning up to $50,000.

During the 2014 tax season, CEP piloted real-time virtual VITA at three of its traditional VITA sites and drop-off virtual VITA at two other sites. CEP prepared a total of 306 returns (211 through the real-time virtual VITA and 95 through drop-off).

For sites offering real-time virtual VITA services, CEP established a tax preparation site at its downtown headquarters- operating similarly to a traditional VITA sitewith a dedicated site manager and trained and IRS-certified volunteers preparing returns for qualifying householdshowever, the site was used solely to process returns remotely. At its three participating community sites (chosen due to their relatively low volunteer turnout), the intake specialist informed clients of the remote preparation option when volunteer capacity was reached.

Sites were equipped with laptops and high-capacity scanners and printers to receive, scan, and transmit tax documents for remote processing. Cloud services were used to securely transmit documents between clients and the volunteer preparers.

CEP screened clients based on a set of basic criteria to ensure the return was appropriate for this type of preparation, and the client interview was conducted with the intake specialist at the site. The clients tax documents were scanned and sent to the remote site, where the return was completed and reviewed by a quality reviewer while the client waited. If necessary, the tax preparer could contact the intake specialist with questions to get any additional information from the client. The return was printed on-site and reviewed again with the client.

CEP also offered virtual VITA drop-off services at two sites chosen due to their extremely high level of client demand. Drop-off services were offered in partnership with Dominican Universitys accounting program, whose students were trained and certified to prepare all dropped-off returns. As part of their class requirement, 15 to 20 students each logged at least 15 hours of traditional, on-site VITA experience and committed an additional 15 hours to preparing dropped-off returns.

At participating sites, CEP screened clients for complexity and ensured clients understood the process. Clients went through the normal intake process on-site, including an interview. When a client elected to use the drop-off service, the intake specialist scanned the clients tax documents and placed them in a queue for return preparation. Dominican University students then completed the return off-site. Clients then came back at up to a week later to review, sign, and obtain copies of their returns.

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Number of Clients 288

Number of Federal Returns Prepared 306

Center for Economic Progress

Federal Returns w/ EITC 101 Value of Federal EITC $187,886

Average Adjusted Gross Income $18,100 Total Refund Value $491,155

DROP OFF YOUR TAXES

Pressed for time?

Notify the intake staff that you want to drop off your tax documents.

Complete the intake forms and submit documents to intake staff.

Return in a week to review, sign and pick up your return.

Figure 1. Real-Time Virtual VITA Model with Center for Economic Progress (CEP)

Figure 2. Promotion of Drop-off Virtual VITA Model with Center for Economic Progress (CEP)

For the 2015 tax season, CEP plans to focus its efforts on expanding the drop-off service to all its tax sites. The real-time tax preparation required significantly more resources and coordination hiring site staff for the remote-only site, and additional planning of logistics between the remote and intake staff; whereas the drop-off service allowed CEP to better match and coordinate client demand with volunteer capacity while still providing an alternative option to clients.

Clients

Traditional VITA Site

Neighborhood A

Traditional VITA Site

Neighborhood B

Remote Tax Prep Site Downtown Location

Houses tax preparers No client walk ins

Provides added tax prep capacity

Traditional VITA Site

Neighborhood C

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Lessons LearnedIts all in the brand name. Client perception of the word virtual created a barrier. In Michigan, using the word virtual in marketing and explanations to clients backfired. Also, pairing rural clients and technology wasnt a good fit. In Arizona, there was confusion surrounding the word virtual.

Real-Time vs. Drop-off All three organizations found clients receptive to the drop-off service, especially when it was clearly a more convenient alternative to longer wait times or returning to wait again another day. At CEP, clear, simple signage helped promote and explain the drop-off service to clients and increased participation rates.

Building off of each of their programs successes, next year the three organizations will integrate the promotion of their model of the drop-off service into their site marketing materials and implement more rigorous organizational best-practices to ensure a positive client experience.

The right volunteer is key. Technology skills were important, but so was the ability to interact and provide customer service, answer questions and respond to concerns especially at the intake stage.

Turn-around time must be consistent. For a drop-off program, technology and staffing must match demand in order to turn returns around within the promised timeframe and maintain the trust of clients.

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*Based on Center for Economic Progress cost analysis

Average cost per return*

Traditional VITA Site

$70.37Virtual VITA

$35.61

Much was learned through this endeavor not only about Virtual VITA but about innovation in the volunteer tax assistance field, in general.

Investments such as this one by the JPMorgan Chase Foundation help practitioners to better serve their clients through innovation.

Given the risk of continued erosion of public funding for volunteer tax assistance even as demand has increased year after year, such investments and support are critical not only to the fields growth but also its survival.

Likewise, practitioners have a responsibility to continually develop promising practices and new structures for service delivery particularly those that improve operational efficiency and cost-effectiveness. Through pilot programs like this one, we improve the lives of those we serve while improving our own chances for sustainability.

ConclusionVirtual VITA offers opportunities to provide more people with improved service. To promote success, VITA partners must adopt the marketing, design and implementation guidelines highlighted by this pilot.

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