Accounting News

Tuesday, June 19, 2012
Free Tax Preparation for Millionaires

To help with voluntary compliance with tax laws the IRS set up the Volunteer Income Tax Assistance Grant Program (VITA). The goal of the program is to provide free tax return preparation for low income individuals. During the 2011 filing season the grant program handed out $3.2 million to local groups. These groups used the money to provide the assistance.

The Treasury Inspector General has released a report on the program. The goal was to determine if the grants are being used well and providing better access to the low income filers it is targeting. The report looked at a sample of returns to see who is using the service.

The study looked at 51 local organizations. These provided 1.9 million returns. Of these organizations, 50 provided tax returns to filers above the limit of a $49,000 gross income. All of these had incomes over $100,000. But that is not the interesting number. Three of the organizations provided returns to people earning over $700,000. But the real interesting returns are the ones that two organizations prepared for people earning over $1 million.

Perhaps the return is started and it turns out that they made $53,000 instead of the guidelines of $49,000. But it is hard to understand how someone who earns more the $1 million even got through the door. It is a shame that people who could have really used the help didn't get it because the funds were wasted on the free loaders. It is also unlikely that is a qualified accountant doing the work at one of these programs. A volunteer is not trained to look for deductions that someone in a high end tax break can take advantage of.

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