Tax season and the IRS evoke different feelings, often depending on a person’s demographic situation. Thanks to the large refunds that low and moderate-income Americans often receive, tax season prompts in many of these folks a feeling of eager anticipation — anticipation that some major players in the tax preparation industry have parlayed into a highly lucrative sub-industry. Perhaps we’ve all seen that man or woman dressed as Lady Liberty, beckoning us into the nearby tax prep location. Her siren call has been particularly effective to people who are expecting large refunds, combined as it often is with the promise of a “rapid refund” in the form of a refund anticipation loan. Millions of people who could get their taxes prepared for free through VITA (Volunteer Income Tax Assistance) or other volunteer programs freely choose this route, and they pay heavily for it. The refund anticipation loan interest charges (often exceeding 100 percent) and the tax prep fees typically cost $150 to $400 of a person’s refund. So if free, high-quality volunteer programs are available, why would people choose to pay that kind of money? One answer can be found in this nugget from a tax prep company’s website: “No Upfront Costs if you choose an Electronic Refund Check (ERC) or a Refund Anticipation Loan (RAL) you pay nothing at the time of your tax preparation because all your fees can be paid with your refunds.”
RALs: Legal? Yes. Profitable? Yes. Affordable for the average person who uses them? Not so much. This year, though, a local VITA program centered at Milligan College countered the allure of the RAL pretty effectively. Serving primarily taxpayers with family incomes below $50,000, the program — led by Milligan business professor and one-time IRS employee Harold Branstrator — completed nearly 300 returns, and none of the taxpayers paid a penny. It’s probably safe to say, in fact, that it saved people a total of at least $50,000 in fees and interest had they all used paid preparers. Partnerships with the Washington County Mayor’s Office, Grandview Christian Church, Catholic Charities, Johnson City Housing Authority and The River ministries gave people plenty of locations and times to choose from.
And then there was the partnership with BCS. Setting an example the VITA program hopes other area companies will follow, BCS provided a gracious donation that will allow a handful of this year’s VITA clients to receive $100 gift cards after a random drawing later this week. May God be praised for creating willing vessels through whom He can do his works!
“Does it make you a king to have more and more cedar? Did not your father have food and drink? He did what was right and just, so all went well with him. He defended the cause of the poor and needy, and so all went well. Is that not what it means to know me?” declares the LORD. (Jeremiah 22:15-16)
For a link to local television news report on this year’s VITA program, click here.
Jeff Keeling is the Director of Communications and Community Relations for Washington County, the former Business Editor of the Johnson City Press, and one of the IRS-certified VITA tax preparers who prepared returns for the Milligan program this year.