Credit Unions Provide VITA(L) Help In These Taxing Times

Cooperatives across the land are continuing the tradition of offering tax preparation services for free this year, and if a member gets a little financial wellness help along the way as April 15 nears, all the better.

Cooperatives across the land are continuing the tradition of offering tax preparation services for free this year, and if a member gets a little financial wellness help along the way as April 15 nears, all the better.

More than 200 credit unions offered the service last year, according to Callahan & Associates data, primarily through the Internal Revenue Service’s Volunteer Income Tax Assistance program, or VITA.

The IRS says more than 3.7 million people had their returns prepared by more than 90,000 volunteers in the 2015 tax filing season. The whole idea fits the credit union mission to a tee.

Of all the things we suggest credit unions should consider doing, this one stands out, says Mark Lynch, senior program manager at the National Credit Union Foundation. It’s good for people of modest means and good for the credit union.

That’s because it keeps people away from tax preparers who often are either very expensive or hawk high-dollar refund anticipation loans, or too often, both. Plus, it gives credit unions the opportunity to recruit new members the VITA program requires participants to serve members and non-members alike and to further position the institutions as leaders in community service and partnerships.

The Montana Credit Union Network is so sure of that that it began serving as the Montana VITA Partnership (MVP) lead in 2011 and has a full-time staffer devoted to the effort.


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She’s Carin McClain, whose title is tax program manager for Montana Credit Union Community Development, the state league’s charitable arm. She says that this year there are 17 credit unions hosting 20 VITA sites at their branches. There are six more sites hosted by community partners, such as one at Flathead Valley Community College in Kalispell, MT, where an employee of Park Side Credit Union ($203.7, Whitefish, MT) volunteers as a tax preparer.

Free tax preparation is a meaningful, measurable way for MCUCD to help serve Montanans in our mission of asset development and financial education, McClain says. It also helps ensure people of modest means claim valuable benefits such as the earned income and credit tax credits $2.15 million of the former and $826,694 of the latter through the MVP program in Montana in 2015 to be exact.

That’s from just 18,401 of the 298,141 Montanans who could have used free tax-preparation sites in 2015. It’s not just the members who benefit.

Empowering And Beneficial

The VITA program has been so beneficial to our members as well as gratifying and empowering for our staff, says Melva McKay-Bass, senior vice president of business development at Suncoast Credit Union ($6.9B, Tampa, FL).

Suncoast hosts two sites itself at the moment and has volunteers working at other VITA sites in counties where they live and work, Members find comfort in seeing their friendly Suncoast staff at these sites, McKay-Bass says.

The volunteers are approved by their managers and undergo IRS training and examination. They then help do long form 1040 returns as well as basic business returns. The returns are electronically filed, and deposits generally are direct deposited in five to seven days.

This is also what makes the program so attractive to members, McKay-Bass says. We also offer financial literacy at the sites with valuable takeaways to help taxpayers make better decisions with their refund dollars.

Those takeaways include avoiding those who might prey on the unbanked and underbanked, including minority communities. For instance, VITA sites are a great way to reach out to the Latino community, especially in partnership with other community organizations such as United Way and other local and regional groups,says Miriam De Dios, CEO of the Iowa-based Coopera consulting firm.

We find that many traditional tax preparation companies heavily market to Latinos, especially the unbanked and underbanked, and oftentimes promote refund anticipation loans and prepaid cards with exorbitant fees, on top of charging high fees for the tax preparation service itself, she says.

De Dios says having bilingual/bicultural staff from the credit union working as volunteers can provide guidance on safe and cost-effective ways to use their refunds, along with benefiting from the availability or direct deposit or low-cost prepaid cards.

Cleaning Up Credit

Newrizons Federal Credit Union ($12.3M, Hoquiam, WA) took that a step further. The first year it offered free tax return preparation, it limited that service to members who had collections issues. The tax returns went directly to bring loans current if they were done through that process, says Ynette Gibbs, CEO of the low-income designated, CDFI-certified credit union serving economically depressed Grays Harbor County.

That was in 2010. Now six of the credit union’s eight employees are certified as advanced tax preparers by the IRS, working primarily at the credit union itself with special days also held at local sites such as a fire station, senior living center, a college, and a Quinault Nation tribal community hall.

Gibbs says her volunteers did 465 returns last year, resulting in more than $750,000 in refunds. We use the VITA program for membership growth and for community awareness of Newrizons, she says. Volunteer recruitment also is key, and includes using social media, flyers, and notices to local employers who might want to pass the opportunity on to their own staff.

Volunteers are, of course, the heartbeat of the program, and credit unions need to have resources to recruit, train, and support them. Just ask Hank Hubbard. The CEO of One Detroit Credit Union ($33.0M, Detroit, MI) participated in the VITA program until it lost grant funding a couple years.

That was kind of the straw the broke the program’s back, Hubbard says. I would say the biggest challenge once we set up all of the equipment, etc., was recruiting and counting on good volunteers. In many cases we ended up having to staff it with paid employees, salaried managers who were already overworked.

It’s really unfortunate because the need in our communities is so strong.

March 30, 2016

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