BEYOND THE NUMBERS
Policymakers gave the IRS additional funds in the CARES Act of March, acknowledging that the agency is playing a critical role in responding to today’s economic crisis by delivering more than 150 million CARES Act stimulus payments. The next stimulus measure, however, should include what the CARES Act did not — additional funding specifically for the Volunteer Income Tax Assistance (VITA) program, a federally supported network of IRS-trained volunteers who provide free tax-filing assistance to low- and moderate-income filers.
That’s because such additional funding would help VITA meet the urgent need of helping millions of low-income households that must file a form with the IRS to receive their CARES Act stimulus payments.
Delivering the payments is a massive logistical undertaking for an agency that’s already hamstrung by a decade of budget cuts. And about 12 million individuals in 7 million households risk missing out because, unlike the millions receiving the payments automatically, they must file a form before October 15 to get them this year.
These individuals include very low-income families with children, people who have long faced significant barriers that have kept them out of work, and low-income adults who are not raising children in their home. They’re disproportionately people of color, who are likelier to have lower incomes due to historical racism and ongoing bias and discrimination, and they’ve been hit hardest by the pandemic’s economic and health effects, emerging evidence shows. Getting the payments to these vulnerable populations requires robust outreach and assistance, and VITA is well placed to help.
VITA operates as a partnership, with the IRS providing matching grants to local governments and institutions. VITA hasn’t been immune from the past decade of IRS cuts, though it has seen modest increases over the past few years. The $18 million that policymakers actually provided for VITA for the 2020 tax filing season, however, is well below the $30 million that they had authorized, and it’s woefully insufficient to address the current crisis.
As VITA sites adapt to the extended filing season and necessary public health measures — including by creating “Virtual VITA” and drop-off tax preparation services — many sites are seeing an influx of non-filers looking to claim their stimulus payment, many of whom lack internet access or face other filing barriers. VITA programs are already familiar with these challenges and can provide the needed support if they’re adequately resourced. For example, they can work beyond the July 15 income tax filing deadline to help non-filers claim their stimulus payments by the October 15 deadline.
VITA can also help low-income non-filers see if they’re eligible for other refundable tax credits, such as the Earned Income Tax Credit (EITC) and Child Tax Credit. These households may not have known they were eligible or simply found filing taxes too hard, particularly if they believed they needed to rely on a paid tax preparer, which can cost several hundred dollars. And, unlike VITA volunteers, the vast majority of paid preparers who file EITC claims are unregulated, so they’re likelier to commit errors that can leave cash-strapped families owing the IRS thousands of dollars or missing out on refunds. Connecting these non-filers with VITA could therefore benefit them in the future as well.
The next stimulus measure should provide $12 million for VITA grants, to fund the full authorized amount for the 2020 filing season, plus another $12 million to waive the program’s matching requirement so VITA sites that have lost funding from cash-strapped local governments and organizations can continue operating.
- El crédito tributario por hijos
- Federal Payroll Taxes
- Federal Tax Expenditures
- Fiscal Stimulus
- Marginal and Average Tax Rates
- Tax Exemptions, Deductions, and Credits
- The Child Tax Credit
- The Earned Income Tax Credit
- The Federal Estate Tax
- Where Do Federal Tax Revenues Come From?
- Where Do Our Federal Tax Dollars Go?