An Expanded VITA Program—Moving Beyond Tax Preparation Kay M. Poston and Rachel A. Smith, School of Business, University

1. An Expanded VITA Program—Moving Beyond Tax Preparation Kay M. Poston and Rachel A. Smith, School of Business, University of Indianapolis The Financial Advising Presentation Introduction The Volunteer Income Tax Assistance (VITA) program has been used extensively to incorporate service learning in the accounting curriculum. The VITA program does not have to be just about tax return preparation, however. It can be expanded to offer a richer set of service learning opportunities for accounting and other business students. Our collaboration with a local community center involved our students in an expanded VITA program, which not only provides income tax preparation services, but also seeks to provide financial literacy training to the center’s low-income clients. Indy’s Campaign for Financial Fitness & Bank on Indy Bank on Indy was launched in October 2009 as a logical extension of Save-Earn-Learn: Indy’s Campaign for Financial Fitness. Save-Earn-Learn, led by the Indianapolis Asset Building Coalition (IABC) and United Way of Central Indiana, had been introduced one year earlier as a program aimed at helping low income residents become more financially literate. Save-Earn-Learn provides tax preparation services at local community centers and also offers financial counseling and education services. Bank on Indy was spearheaded by Indianapolis First Lady Winnie Ballard as a means of reaching out to the almost 80,000 “unbanked” residents of Marion County. It is jointly sponsored by the City of Indianapolis, the IABC, and several other organizations. Its goal is “to educate and bring the unbanked into the financial mainstream as a first step toward financial independence, security, asset building and wealth generation.” Syllabus for the Special Topics Course Course Description This course is designed to provide students with the practical application of financial skills while simultaneously offering financial education to the low-income in metro-Indianapolis. Students will facilitate three-hour Saturday morning sessions at Shepherd Community Center from January to April which provide financial advising to individuals receiving free tax preparation as part of the VITA (Volunteer Income Tax Assistance) program. This will include advising the individuals regarding the most effective alternatives for utilizing their tax refunds received as part of the EITC (Earned Income Tax Credit). These strategies will include paying off debt, establishing emergency funds, opening a checking or savings account, saving for longer-term goals, and enrolling for a free financial education class. The advising will also include the discussion of pitfalls such as income tax refund loans and payday loans. The class will integrate the resources provided by the Bank on Indy initiative, a public-private partnership that seeks to provide needed access to banking products, including savings and checking accounts, for the 79,800 “unbanked” citizens in Marion County. The goal is to educate and bring the unbanked into the financial mainstream as a first step toward financial independence, security, asset building and wealth generation. This will include financial literature and referrals to participating banks and financial education centers. The requirements of this course include attendance at the Shepherd Community Volunteer Training Session in January, facilitating assigned Saturday morning financial advising sessions, meeting for scheduled training and feedback sessions with the instructor of the course, and providing a reflection paper after the advising sessions are complete in April. Course Requirements Shepherd Community Volunteer Training Session Attendance10% Shepherd Community Financial Advising Sessions Attendance60% Training & Feedback Sessions with Instructor Attendance 15% Post-Project Reflection Paper 15% Overview of Courses We partnered with the Shepherd Community Center to pilot two separate upper division courses. One was a 3 credit hour independent study, and the other was a 2 credit hour special topics course. Both courses required students to participate in Shepherd’s volunteer orientation session and to be on site at the VITA sessions throughout the tax season beginning in late January 2010 and continuing through April 2010. The student in the independent study course prepared tax returns and produced a report analyzing and synthesizing client demographic data for presentation to Shepherd’s management. Students in the special topics course met with clients to discuss effective strategies for utilizing their tax refunds and explain the negative aspects of taking out tax refund anticipation loans and payday loans, as well as other financial education topics. The presentation they developed was consistent with the intended message of the Bank on Indy program, an initiative launched in October 2009 as part of Indy’s Campaign for Financial Fitness and in which Shepherd was participating. Syllabus for the Independent Study Course Course Description This course is designed as a service learning experience in which the student will participate as a volunteer income tax preparer at the Shepherd Community Center (a designated site for the Internal Revenue Service’s Volunteer Income Tax Assistance (VITA) program). The student will obtain certification by the IRS as a basic level tax preparer, will participate as a tax preparer in weekly sessions at Shepherd and maintain a reflective journal of those experiences, and will prepare a paper synthesizing and analyzing demographic data related to the program participants. Course Objectives Upon completion of the course, the student will have: Completed the IRS self-study modules and become certified by the IRS as a tax preparer. Become adept at using the IRS tax preparation software to prepare tax returns of qualified taxpayers. Learned to interact with diverse clients, all from an underprivileged population. Gained an appreciation of how accountants can give back to their communities through meaningful volunteerism. Learned to interpret and synthesize data for presentation in a research paper format. Course Requirements Student will begin the IRS course modules over the holiday break and successfully obtain certification at the basic level by January 15, 2010. Student will participate in one of three volunteer orientation sessions offered in January at various alternative locations and dates. Student will participate in on-site tax preparation each Saturday morning (with the exception of Spring Break) at the Center. The sessions are held from 9 AM to 12 Noon beginning on January 23, 2010 and ending on April 10, 2010. (The professor will maintain regular contact with the site coordinator to verify student’s participation and to assess performance.) Basis for Grading Successful completion of IRS course and certification 20% Weekly participation in VITA sessions 40% Weekly journal submissions and periodic meetings 10% Performance assessment in consultation with on-site coordinator 10% Data analysis project 20% Shepherd’s VITA Program Shepherd offered tax return preparation services for the first time in Winter 2009 as part of the Save-Earn-Learn program. Having observed clients’ refunds constituting as much as 25% of total annual household income and noting the prevalence of reliance upon tax refund anticipation loans, Shepherd saw an opportunity to expand the 2010 program to formally include financial literacy training in its second year as a VITA center. In Summer 2009, we were approached about the possibility of using our students to help facilitate the second year’s VITA program. With the October 2009 launching of Bank on Indy, Shepherd also was able to coordinate with a local bank to have a representative on site to open checking accounts so that unbanked clients could have their refunds direct deposited into their newly established accounts. The 2010 process consisted of a distinct series of steps. First, each potential client’s documentation was reviewed to insure that the client had brought all required materials. Those clients whose documentation was complete proceeded to the tax preparation stations where they worked one-on-one with a certified preparer to complete their federal and state returns. Clients then moved to another room where their returns would be reviewed for possible errors. While awaiting review of their returns, clients met with our students for the financial advising session and had an opportunity to open a bank account and/or enroll in an upcoming free financial education course offered at Shepherd. About Shepherd The Shepherd Community Center is “a faith-based, non-profit organization established in 1984 with a simple but staggering goal: to break the cycle of poverty on the near east side of Indianapolis. Located centrally within the community it serves, Shepherd offers programs for children, teens, adults and families, helping to meet their physical, emotional, academic, and spiritual needs.” • Student Reflections • Most of the people we talked to were not aware of the information in our presentation. Knowledge is power as they say, and we absolutely put some power into those people’s hands. • We were able to adapt our discussion based on their background and interests, which was nice to be somewhat different for everyone even though we covered the same materials. • They could see how money was being foolishly wasted by using check cashing facilities. They could also see how money could be built over time with compounding interest. • People were very interested and asked questions. There was a lot of back and forth question and answer. • We had to be very careful with how we worded certain things in order to not make them feel like they were poor or academically inferior. • Those who were discouraged by problems that they had with banks before were encouraged by the second chance Bank on Indy offers. • Any volunteer service I [had previously] provided was more labor intensive, and had nothing to do with my intellect. This opportunity opened my eyes to ways that I can help people with the skills I have obtained from my education. • Personally meeting each individual I was serving, getting to know their story, and witnessing the joy I was able to bring to most of them moved me in a way no other service experience has been able to do. • A few weeks into the project I really decided financial advising was exactly what I wanted to do in life. • Prior to my time with the VITA program, I had never given a career in tax thought. This program not only furthered my knowledge but also led me to another possible career path that I probably would not have considered. • Core Competencies Addressed • Functional competencies—Decision modeling, measurement, reporting, research, leverage technology • Personal competencies—Professional demeanor, problem solving and decision making, interaction, communication • Broad business perspective competencies—Strategic/critical thinking, legal/regulatory perspective, marketing/client focus Acknowledgements We thank Jay Height, Shepherd’s Executive Director, for his support of our partnership and Mary Jo Hein, Director of Events and Volunteers at Shepherd, for working closely with us and our students in the development and administration of the two pilot courses. • Relevant Websites • www.shepherdcommunity.org • www.bankonindy.org • www.indianahelpers.com/Newsletters_Flyers/2009SaveEarnLearnFactSheet.pdf