Income to Assets Project: Tax Preparation and Assets Formation in Vermont

The Income to Assets grant serves to increase the capacity of Volunteer Income Tax Assistance (VITA) sites and related services, which is a statewide program of the Vermont Community Action Agencies (CAA). This grant is managed by Central Vermont Community Action Council (CVCAC) with funding from the Office of Community Services, Department of Health and Human Services. Income to Assets serves the multifold purpose of promoting and expanding the use of the Earned Income Tax Credit (EITC), financial literacy programming, asset development and free tax preparation assistance for low-income Vermonters that is carried out by the CAA network in Vermont. Through this project, CVCAC worked with its sister CAAs and other partners to conduct the following three activities:

1. Replication and establishment of additional VITA sites, combined with drop-off filing services, to other regions of the state that are underserved by this program by collaborating with sister CAAs, the Internal Revenue Service, and the Vermont Department of Taxes.
   
2. Exploration of strategies to encourage families to deposit a portion of their refunds and/or credits in an asset building account, such as their Individual Development Account (IDA).
   
3. Evaluation of the Income to Assets grant to determine the impact of VITA services on clients’ use of their refunds and credits; how Vermonters overall prepare their taxes and use their refunds and credits; and best practices for improving VITA services and increasing low-income Vermonters' utilization of these services as well as savings strategies through programs like the IDA.
   

Data collected by CVCAC during the 2008/2009 tax season demonstrates the impact of VITA services in the central Vermont area. CVCAC assisted 725 households in recovering a total of $1,124,363 which included $405,364 in Earned Income Credits and $191,069 in other credits. They also saved these families an additional $126,825 in tax preparation fees.

The Center for Rural Studies (CRS) at the University of Vermont is the third party evaluator for the Income to Assets grant. This project funding period is from October 2007 through 2010 and consistent data has been collected by CRS in the first and second fiscal years of this grant. This evaluation report informs the goals of the grant through data collected during the 2006/07 (from a previous Income to Assets grant), 2007/08, and 2008/09 tax seasons: 1) Vermonter Poll 2009 statewide data collected on tax preparation practices and asset formation, 2) a survey of VITA clients on their tax practices and use of refunds from 2007-2009, and 3) a focus group with staff to discuss strengths and challenges of the 2008 tax year.

For more information about this study or to request additional copies of this report, please contact Michele Cranwell Schmidt, Evaluation Coordinator, at mschmidt@uvm.edu, call (802) 656-0256 or visit www.uvm.edu/crs/.