Providing Tax Assistance for Refugee Families through VITA Programs

Preparing an income tax return can be challenging, especially to new Americans who face language barriers and often are unfamiliar with the process of filing taxes in the United States. Refugees are among the many families that do not claim valuable tax credits—especially the Earned Income Tax Credit (EITC)—each year. In addition, many refugee families who are not connected to free tax preparation services pay for that assistance. 

The Volunteer Income Tax Assistance (VITA) Program—a program of the Internal Revenue Service—offers free tax help to low- to moderate-income people who cannot prepare their own tax returns. By partnering with VITA sites—or becoming VITA sites—organizations that serve refugee communities can help refugee families to claim valuable tax credits as a way to start building assets. In addition, tax preparation assistance through VITA provides an opportunity to help families save. Many VITA programs encourage families to deposit some or all of their tax refund into savings accounts, especially individual development accounts (IDAs). Providing clients with this option helps them to get a running start on building assets.

This guide outlines strategies for using VITA to provide tax assistance to refugee families. If your agency is well staffed or has many volunteers, implementing your own VITA program is an option. As an alternative, consider partnering with an existing VITA program.

Strategies for Implementing Your Own VITA Program

Running a VITA site program requires time management and anticipating high demand, especially near the end of the tax season. Planning ahead is critical for a successful program.

Background and eligibility:

• Refugees, like other permanent residents are eligible for tax credits. People with temporary status, like students, tourists, etc., who are not eligible to work in the United States, are not eligible for these credits.
• As permanent residents, refugees are eligible to receive social security numbers. Documentation of their refugee status is needed to obtain a social security number.
• Refugees may already be small business owners. If so, they need to be made aware of business tax deductions and credits, as well as personal income tax credits. Business tax deductions and credits could include such items as depreciation of equipment, business expenses, and credits for locating in an empowerment zone or other specially designated area.

Pre-tax season strategies:

• Market to your clientele before tax season gets underway. Have materials about your IDA program available and be sure to explain how their EITC could be their first deposit. Explain what documents are needed from the client, such as their paystubs or photo identification. 
• Have your asset building services coordinator (or similar staff) send a special invitation to IDA participants telling them how to use their EITC in their IDA accounts. Encourage them to bring their IDA account information to use for their electronic deposits. (Remember, participants can direct their returns into multiple accounts—one being their IDA.) 
• Speak to your IDA banking partners. Encourage them to come onsite and open savings accounts for participants receiving refunds or even set aside account numbers that your participants can use for direct deposit (in that case, participants might need to complete account opening procedures with the bank within several days). This conversation may need to be started two months prior to tax season to get everything ready on time. If the IDA bank partner has the account onsite, it should be easily converted into an IDA later when the participant qualifies—and you will also have a record that the money came from earned income, if it is EITC.

During tax season:

• Use marketing materials in your office to encourage asset building using EITC.
• Train your “screeners or greeters” on what the eligibility requirements are for your IDA program. Have them introduce the concept to those waiting to have their taxes prepared. Help participants gather needed enrollment documents and make copies for their enrollment package.
• Train your tax preparers. They will know if a family is likely to be eligible once their taxes are complete, and they can encourage EITC recipients and others receiving a tax refund to direct deposit to their IDAs.

After tax season:

• Send follow-up letters within a month or two of tax season encouraging participants to start IDAs and to use their EITC and refunds toward asset purchase. 

Remember, running a VITA site takes time, so be prepared with an adequately trained number of staff and volunteers. For more information about the basic steps and key operational activities necessary for running your own VITA site, check out the United Way of Texas’ How to Start a VITA Site in Your Community toolkit at: http://www.uwtexas.org/public/files/VITA%20How-To%20Toolkit_FINAL2.pdf.

There are several national organizations that can assist local groups that decide to provide tax assistance. These include the Center for Budget and Policy Priorities, which has produced materials on the EITC, the National Consumer Tax Coalition, and the Assets for Independence (AFI) Resource Center.

Information on these resource organizations can be accessed at the following links:

• Center for Budget and Policy Priorities: www.cbpp.org/research/index.cfm?fa=topic&id=27 
• National Community Tax Coalition: www.tax-coalition.org/program-tools/managing-a-tax-site
• AFI Resource Center: www.idaresources.org 

Partnering with Existing VITA Sites 

If operating a VITA site is not yet feasible for your agency, consider partnering with an existing local VITA site. By doing so, your organization can form a coalition to deliver beneficial tax assistance and information to your refugee clientele and community and help fund deposits into IDAs and other savings and investment opportunities. For specific information on forming partnerships, please see the Resource Development Handbook, which has a chapter on collaboration and coalition building. Copies are available from the Office of Refugee Resettlement (202-401-4825) or the Southeast Asian Resource Action Center (202-667-4690).

To locate the nearest VITA site, visit www.idaresources.org/VITAlocations.

To form an effective partnership for a successful VITA program, each partner should have an understanding of roles and responsibilities. This is usually formalized in a commitment letter or memorandum of understanding. The degree of shared responsibility will vary for each partnership, depending on each agency’s current capacity.

When approaching VITA sites for a partnership, it is important to remember that the refugee service organization needs to bring value to the partnership. The VITA site can bring valuable tax preparation services your refugee clients. Refugee service organization, on the other hand, can help boost the number of clients served by the VITA site and help diversify its clientele. Refugee serving agencies also add value by helping with volunteer recruitment, training, and marketing of the VITA site’s services.

Once a partnership has been formed, some things that you can do onsite during your VITA partner’s tax assistance include:

1. Set up a table with your promotional materials in the waiting area. Most VITA programs are “first come, first served,” so your fliers, success stories, and pictures will draw the attention of people who are waiting for assistance.
2. Make sure your tax preparers understand your IDA program.
3. Adjust your outreach materials to emphasize maximizing the benefits of the EITC program (e.g., “double your tax return,” “invest your tax return in home buying”).
4. If possible, spend a couple of hours a week at the VITA site talking with refugees. 

Volunteer Recruitment

The number of volunteers needed will depend on your intended scope. Your agency can help in determining the scope by assessing the needs of the community. Additionally, recruiting volunteers from refugee communities and those knowledgeable about your clientele can help provide a familiar face for clients.

Training

There are many training options for VITA site volunteers, each of which is described in the United Way of Texas’ How to Start a VITA Site in Your Community toolkit. Options for a refugee agency include having an existing staff person become certified in tax filing assistance or hiring a person who is already certified in tax preparation and is fluent in the native language of the refugees. Other possibilities include training quality reviewers, interpreters, and greeters. Quality reviewers with knowledge of refugee-specific needs and cultural backgrounds are more likely to ensure accuracy on the taxpayer’s return. Interpreters from refugee agencies are always essential to a VITA site, especially for low-income refugee communities that often have adults with limited English proficiency. Finally, greeters from refugee agencies are also likely to have an existing rapport with refugee clientele, and would make clients feel more welcome when entering the site and therefore more inclined to come for assistance.

Marketing and Outreach

To encourage refugee families to seek help from VITA sites, outreach and marketing must be targeted and effective. Your existing relationships with refugees enable you to market and promote your VITA partnership via word of mouth. Your organization can add value to a VITA partnership by providing targeted promotional materials in appropriate languages. Consider establishing a formal referral partnership with existing VITA sites, with arrangements for referral of your clients with tax assistance needs to the VITA sites and referral of any refugees who come to the VITA sites to your organization.  

Other potential partners are grantees under the federal AFI program, which have financial education and IDA programs that can be accessed by refugees. If your organization doesn’t have these programs already in place, these groups would be natural partners.

Example of a Refugee Service Provider that Operates a VITA Site

One example of a refugee service provider that made the decision to become a VITA site is the Alliance for Africa in San Diego, California. The Alliance became a VITA site in order to complement other services that they provide to refugees, including a small business loan program, financial literacy classes, and IDAs. For them it is a way to funnel money directly back into the community. 

The number of people assisted has grown substantially each year, as the word continues to get out into the community. For their clients, there is a comfort level in receiving assistance from the Alliance, as they have a level of trust with them that is unique. Doing taxes in a new country, especially the first time, is frightening and clients know that they will be guided through the process and will have translators available in their native language. Fully explaining the tax form and how the amount of the refund or the tax due is calculated is important, so that each client increases their knowledge and is able to complete the tax filing on their own in the future.

To find enough volunteers to help staff the VITA program, the Alliance contacted local colleges. Accounting majors have been particularly interested in helping.

Conclusion

In helping their clients prepare their tax returns, refugee-serving organizations introduce their clients to two significant opportunities: claiming important tax credits and using their tax refunds to start saving through an IDA. Whether the organization partners with a VITA site or becomes one in its own right, the service this program provides to refugees is invaluable.  

This is one in a series of fact sheets on asset building and refugee communities produced by the Assets for Independence Resource Center. For more information, contact the AFI Resource Center at info@idaresources.org or 1-866-778-6037.