Retention Plan Key for New Members Flocking to Free Tax Prep Program
The Volunteer Income Tax Assistance program has 12,000 sites nationwide and another 324 partnerships with community organizations that have a shared interest of helping taxpayers get all that is due to them from the IRS.
The number of credit unions that have signed on increased from 64 in 2004 to 246 in 2007, according to Debra Chandler, senior tax analyst with the IRS' Stakeholder, Partnerships, Education and Communications division. For the 2007 tax season, credit unions prepared 18,000 returns, which amounted to $8.2 million in earned income tax credits and $3.2 million in child tax credits.
Chandler said credit unions benefit from VITA through the establishment of new accounts and the potential opportunity to grow deposits. The IRS provides training and software, quality assurance checks and waivers to protect credit unions in those cases where returns were not filed correctly. Still, for some, the IRS remains an intimidating agency and credit unions can not only break through those fears but educate filers on credits they may not know they are eligible for.
"There is an underground economy out there and the IRS is well aware of it," Chandler said of businesses like home-based hair dressers and mechanics. "We don't want you to be IRS's enforcers but educators. You are a trusted entity in the community."
Chandler said $15 billion State Employees' CU is a shining example of how committed President/CEO Jim Blaine is to VITA. During the last filing season, 400 employees and volunteers prepared returns at the financial institution's 215 branches across North Carolina.
Chandler's office has also partnered with NCUA on several Webcasts and also works with the National Federation of Community Development Credit Unions, Defense Credit Union Council, NAFCU, CUNA and the National Credit Union Foundation. NCUA has grants available for credit unions that want to launch VITA, she said.
While VITA appears to be a win-win for the industry and IRS, one attendee at Chandler's session at the African American CU Coalition's annual meeting cautioned that the long-term work starts after tax season is over.
"Be sure to have a retention program in place for VITA users," said the representative from a New York-based credit union. "We had people coming and going, almost like indirect lending. We want to keep them as members."
The credit union sent out a welcome letter that featured their rates to those that it helped prepare returns for.
Meanwhile, the IRS is working with Discover and Chase that would allow VITA tax filers to put their refunds on debit cards, Chandler said. A pilot is currently underway to test the transactions. Any future deals would require the card companies to not charge any fees. However, if fees were assessed, the maximum would be $10.
Of the 12,000 VITA sites, the AARP has 7,200 of them, followed by regular sites (3,900), those that serve military personnel (350) the elderly (300) and credit unions at 250.
"There is plenty of opportunity for credit unions to grow," Chandler said.