Thursday, December 30, 2010
As tax season approaches, United Way Monterey County is training a team of 90 volunteers to prepare taxes for low-income households. Part of the IRS’s Volunteer Income Tax Assistance (VITA) program developed 40 years ago, United Way and 14 local partner organizations will set up shop in eight locations beginning Jan. 28 to file taxes for households earning less than $49,000 per year.
The group hopes to prepare taxes for at least 800 households in 2011, with a refund goal of $1 million, which is “money that stays in the community,” says Fatima Dias, Director of Marketing and Communications for United Way Monterey County.
In 2010, the average refund for those filing through VITA in the county was $1542.85, according to data provided by United Way. With 671 taxpayers participating, the returns amounted to almost $834,000, more than double its 2008 figures.
Those without social security numbers also are eligible, and can apply for individual taxpayer identification numbers, for which no proof of immigration status is required.
Dias considers free tax preparation “a gift. For six-figure earners, a return is a vacation. For our people, it’s getting an apartment,” she says.
Need rises during tax season, which consistently shows the highest rates of unemployment in the county when seasonal work in agriculture and hospitality ebbs. Applications for county social services surge by 30 percent from December through March.
VITA hopes to combat abuse by paid tax preparers, which in some cases “target people desperately in need of resources,” says Dianna Carrillo, Corporate Regional Director of the Center for Employment Training, a VITA partner. Such businesses typically charge per document until “the money that is captured in the tax return is wiped away,” she adds.
Lee Embry, a CPA at Tostevin Accountancy Corporation in Monterey, which completes thousands of tax returns annually, says, “I have never heard anybody in the profession talking about a piece-work system. As far as I know, it doesn’t exist among reputable firms.” Tostevin and its peers charge hourly or flat rates, he says.
Beyond the fee structure, VITA warns taxpayers against paid preparers who push refund anticipation loans (RALs), set at exorbitantly high interest rates, says Carrillo.
H&R Block, one of the world’s largest tax services providers, announced last week that the federal Treasury’s Office of the Comptroller of the Currency issued a directive terminating the controversial high-interest RALs it granted with HSBC.