RD655 - Report on the Virginia Community Action Partnership Earned Income Tax Credit Initiative Virginia CASH Campaign – December 1, 2023

Executive Summary:

The coalitions making up the Virginia CASH Campaign were well positioned to continue their modified and virtual tax preparation work this filing season. As a result of the pandemic, creating and managing multiple service delivery models became the norm with program managers and site coordinators discovering new ways to engage new and existing volunteers, communicate with sometimes reluctant clients and continue to provide service while trying to get back to a normal filing season where many customers prefer face-to-face service delivery. Eighteen coalitions working with community volunteers received funding from the Earned Income Tax Credit grant. VACAP supports this program with its own funds and receives none of the appropriation for administering the grant program.

The Virginia CASH Campaign highlights from January-July 2023:

• $19 million in federal refunds
o Over 19,500 federal returns filed

• $5.4 million in EITC refunds
o Almost 3,500 taxpayers claiming EITC
o Over $4.5 million saved in tax preparation fees

• Over $4 million in Child Tax Credit/Additional Child Tax Credit

• $5 million in state refunds
o Over 16,700 state returns filed

• Almost 600 Volunteers
o Over 22,800 hours of tax preparation time with a value of $1.3 million in volunteer hours donated to deliver this program

The modest state-funded $185,725 EITC Grant program (average grant to each local program is $8,800) resulted in over 600 volunteers working with 20 coalitions (two coalitions did not apply for funding) to provide free tax preparation and financial education services at almost 80 Volunteer Income Tax Assistance sites throughout Virginia. Due to inflation and the static appropriation level, sites are consistently struggling to maintain the same level of service as grant funds have not kept up with the level of need. Many sites have experienced significant turnover in their staff who manage the program, which includes coordinating volunteers and marketing the program. The sites have continued to demonstrate local and regional leadership in making these programs national models and see the need for this service growing exponentially.

More coalitions are offering Facilitated Self-Assistance which allows clients to file their own taxes where help is available if needed. Independent Sector estimates the 2023 value of volunteer time nationally at $31.80 per hour. In Virginia, the value is $32.59/hour. The Virginia CASH Campaign volunteers contributed over 22,800 hours of tax preparation to the program. Staff hours for the VITA program exceeded 17,000 hours. Additional hours were contributed for tax training and financial education. This equates to almost $1.3 million in value to the program and communities where staff and volunteers live and work.

The Virginia Community Action Partnership (VACAP) EITC Initiative supports community groups and coalitions throughout Virginia that provide free tax preparation services and promote financial stability, savings and asset building to modest income working individuals and families. The Virginia CASH Campaign (Creating Assets, Savings and Hope) gives the program an identity that is used by the coalitions to engage community partners in their work. As part of the VACAP Pathways from Poverty to Prosperity Summit in November 2022, Virginia CASH Campaign hosted a pre-conference workshop focused on recruiting, training and managing volunteers and marketing and outreach for your VITA program. Over 40 site coordinators, program managers, and volunteers from across coalitions providing free tax preparation services, IRS partners, funders and strategic partners were in attendance.

The new round of funding for the EITC Initiative was announced on September 28, 2022, and grant applications were due on November 10, 2022. Recipients were notified of successful proposals on December 2, 2022, and funds were disbursed by December 8, 2022. Each coalition submits a budget and plan as to how the grant funds will be used throughout the year. The largest funding allocation is personnel costs relating to VITA site and volunteer management (62%). Approximately 22% covers rent, equipment, supplies, training, and advertising.

The changes made to VITA because of the pandemic have made the coalitions more resilient and created thoughtful adjustments that continue to be modified to make the program stronger, more robust and more responsive to clients. Virtual services like drop off and GetYourRefund continue to be used. Customers hoping to be back sitting face to face with their volunteer, found other models would work for them, resulting in more efficient use of everyone’s time. Many clients in more rural areas found that virtual options requiring high speed internet were not going to work for them because of technological limitations. Filing season continued past its normal deadline of April 15 with many sites providing services until the October filing season end.

Monthly VITA Chats that were started in April 2020 continue to keep coalition partners engaged and current on tax law changes and other ongoing concerns related to providing services. The VITA Chats have been beneficial to keep partners learning from one another.

Linking the tax time moment with other opportunities for financial engagement and empowerment is a goal when providing VITA services. Because a tax refund with EITC and CTC may be the most money a client sees all year in one lump sum, it is important to connect the client with financial empowerment opportunities. Keeping taxpayers compliant is one of Virginia CASH’s most important functions. If a taxpayer has a problem with the IRS or Virginia Department of Taxation, all other efforts to help improve their financial situation are destined to fail.