Tax Administration

This briefing report provides information on the Internal Revenue Service's (IRS) grants for the Tax Counseling for the Elderly Program. Under the program, trained volunteers, who provide tax help to the elderly, may be reimbursed for their expenses associated with assisting taxpayers. The American Association of Retired Persons (AARP) continues to be the dominant program sponsor, managing a nationwide Tax Counseling for the Elderly Program with 90 percent of all federal grant funds. AARP reported that in fiscal year 1992, its volunteers helped 1.5 million taxpayers at an average cost of $2 per person. GAO discusses how much the nonprofit sponsoring organizations received in fiscal year 1992, how the funds were spent by the five organizations receiving the largest grants, and how accountable these groups are to IRS for the funds spent.

GAO found that: (1) in 1992, IRS granted 58 organizations $3 million for recruiting volunteers to provide free tax assistance to the elderly; (2) the grantees must use 70 percent of grants funds to reimburse volunteers' out-of-pocket expenses and the remaining funds for administrative expenses; (3) according to IRS records, the five largest grantees were within IRS expenditure guidelines; (4) grantee organizations were accountable to IRS through on-site visits, reviews of quarterly expense statements, and independent audits of grantees which receive more than $25,000 in federal funds; (5) the two largest grantee organizations had detailed accounting and reporting procedures, including independent audits; and (6) the TCE program has an effective detailed program activity and fund disbursement reporting system which provides reasonable assurances that grantees are using grant funds for tax preparation assistance to the elderly.