TIGTA Finds Inaccurate Preparation of Tax Returns at Volunteer Tax Preparation Sites
Fewer tax returns are being prepared accurately at the Volunteer Program sites sponsored by the Internal Revenue Service (IRS), according to a new report by the Treasury Inspector General for Tax Administration (TIGTA).
TIGTA found that the accuracy rates for tax returns prepared at Volunteer Program sites decreased sharply from the 2010 filing season. Of the 36 tax returns prepared for TIGTA auditors, only 14 (39 percent) were prepared correctly. Volunteers prepared the tax returns inaccurately because they did not follow all guidelines, used intake sheets incorrectly or, in some cases, knowingly modified the facts the auditors presented.
“The findings of this review are very troubling,” said J. Russell George, Treasury Inspector General for Tax Administration. “The Volunteer Program plays an important role in helping many taxpayers, notably those who have low incomes and the elderly, disabled, and limited-English proficient, participate in the tax system. Like all taxpayers, they deserve to have their tax returns prepared accurately. I am pleased that the IRS has agreed to our recommendations to address these problems,” George added.
The IRS Volunteer Income Tax Assistance, or VITA program, has existed since 1969. In Fiscal Year (FY) 2011, the IRS awarded a total of 179 organizations $12 million in Federal matching grants to help VITA sites file tax returns electronically and enhance training of the volunteers who staff the sites. A total of 87,602 volunteers prepared approximately 3.1 million individual income tax returns at 12,326 Volunteer Program sites in FY 2010.
The IRS has implemented an extensive quality review process in the program, but that process has limitations and may not be providing reliable results. Current steps and processes do not ensure the integrity of volunteers, even though the volunteers have access to taxpayers Personally Identifiable Information, such as Social Security Numbers, drivers licenses and home addresses. According to the report, the IRS does have a process to help ensure willful acts of fraud occurring at Volunteer Program sites can be reported, but improvements are needed.
TIGTA made a series of recommendations designed to improve the quality and controls of the program. The IRS agreed to implement TIGTAs recommendations.