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Multiple offers and virtual VITA

Context

Wayne Metro's Volunteer Income Tax Assistance (VITA) program has a long history of encouraging taxpayers to save a portion of their tax refunds. The organization has used a mix of incentives to encourage tax-time saving, including a SaveYourRefund sweepstakes and prepaid gift cards for taxpayers, which is one of our promising practice for increasing saving at tax time : offering saving options more than once at the tax site.

Wayne Metropolitan Community Action Agency (Wayne Metro) is a 501(c)(3) non-profit organization serving approximately 35,000 low-and moderate-income residents throughout Wayne County, Michigan. Wayne Metro empowers people and communities to be strong, healthy, and thriving in its pursuit to eliminate poverty.

Challenge

With the COVID-19 pandemic, Wayne Metro had to switch from its traditional in-person model to a combination of fully virtual tax preparation, where the taxpayer is never physically present at the tax site, as well as drive-up/drop-off assistance. This strategy kept taxpayers, volunteers, and staff members safe, but it dramatically reduced interaction between taxpayers and VITA volunteers. This eliminated many opportunities to offer savings options, including at the critical moment when taxpayers enter direct deposit information into their tax returns and could allocate some of their refund to savings. As a result, Wayne Metro needed to redefine what ‘multiple offers to save’ meant in this new service model.

Response

Wayne Metro identified two critical opportunities within its Virtual VITA process to encourage savings and promote their saving incentives. The first opportunity was the intake appointment, when staff or volunteers could talk with taxpayers about the amount they wanted to save and the special incentives available. The second was when staff and volunteers review the completed tax returns with taxpayers to ensure accuracy. Wayne Metro's seized those opportunities to share information about savings incentives and ask whether taxpayers wanted to split their refunds. The volunteer return preparers, who were trained on the importance of savings at tax time and the program's savings incentives, were also prepared to take advantage of any other opportunities to encourage savings if they had any communication with taxpayers.

Results

Despite the challenges of the pandemic and the limited opportunities for taxpayers and preparers to communicate, Wayne Metro helped taxpayers maintained the same level of savings in the 2021 filing season as they had in prior tax seasons. The program identified six reasons for this success:

  1. Establishing taxpayer expectations around saving. Based on their experiences in previous years, returning customers expected to be offered savings incentives. They planned to save so they could again receive those rewards.
  2. Forwarding direct deposit instructions to return preparers. At intake, taxpayers elected to save a specific amount and provided their direct deposit information so preparers already knew what portion of the refund to direct to savings.
  3. Suggesting amounts to save at intake. Wayne Metro used the following anchor messages and prompts to help consumers focus on a savings goal:

    • If the taxpayer had used Form 8888 the year before to split direct deposits, suggest saving the same amount this year.

    • If the taxpayer claimed children as dependents and could anticipate a larger refund, but had not previously used Form 8888, suggest saving $500.

    • If the taxpayer didn’t claim children and could anticipate a smaller refund, suggesting $50.

  4. Reassessing at quality review. Taxpayers who wanted to postpone a savings decision until knowing the size of their refund would learn the amount and decide whether to use Form 8888. Those who had decided at intake to save could adjust the allocation if the refund was smaller or larger than anticipated. Knowing there would be an opportunity to change their mind before the return was filed made taxpayers more comfortable making a saving plan at intake.
  5. Training all volunteers on tax-time savings. All volunteers received training on the benefits of saving and Wayne Metro's savings incentives. Even though the pandemic li4mited direct conversations between preparers and taxpayers, the return preparers understood the savings options and could engage taxpayers when opportunities arose.
  6. Offering an incentive. A $30 gift card for saving is a proven motivator. Wayne Metro secured private funding from financial institution partners to provide gift cards, and at the close of the reporting period, 150 gift cards were issued to savers.

Looking Forward

Intake and review will remain critical moments to encourage tax-time savings, even as more tax assistance is delivered in person. The lessons learned during the pandemic will help leverage those moments. In addition, as in-person assistance resumes and Virtual VITA methods evolve, the 2021 experience will enhance the quality of increased direct communications between return preparers and taxpayers.