Volunteer Return Preparation Program
The Internal Revenue Service, in response to questions received
relating to compensation of volunteers, is providing this document
indicating its position as defined under the Volunteer Protection Act of
1997. The volunteer return preparation program includes Volunteer
Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE).
Disclaimer - the Volunteer Protection Act of 1997 is not owned or
written exclusively for Internal Revenue Service. This is a public law
and relates to businesses that use volunteers to provide services.
Volunteer Protection Act of 1997
A volunteer is defined in Section 6 USC 14505(6) of this act,
“…an individual performing services for a nonprofit organization or a governmental entity who does not receive --
(A) compensation (other than reasonable reimbursement or allowance for expenses actually incurred); or
(B) any other thing of value in lieu of compensation in excess of $500
per year, and such term includes a volunteer serving as a director,
officer, trustee, or direct service volunteer.”
Section 4 USC 14503(a), Limitation on Liability for Volunteers, states;
“ (a) Liability Protection for Volunteers.--Except as provided in
subsections (b) and (d), no volunteer of a nonprofit organization or
governmental entity shall be liable for harm caused by an act or
omission of the volunteer on behalf of the organization or entity if—
(1) the volunteer was acting within the scope of the volunteer's
responsibilities in the nonprofit organization or governmental entity at
the time of the act or omission;
(2) if appropriate or required, the volunteer was properly licensed,
certified, or authorized by the appropriate authorities for the
activities or practice in the State in which the harm occurred, where
the activities were or practice was undertaken within the scope of the
volunteer's responsibilities in the nonprofit organization or
governmental entity;
(3) the harm was not caused by willful or criminal misconduct, gross
negligence, reckless misconduct, or a conscious, flagrant indifference
to the rights or safety of the individual harmed by the volunteer…”
In a recent IRS Counsel Opinion (dated 03/24/2009), the following interpretation was provided relating to the sections above:
Section 14505(6) Defines volunteers as those who do not receive either
"(A) compensation ...; or (B) any other thing of value in lieu of
compensation, in excess of $500 per year." Although the statute as
printed in Title 42 ambiguously includes the $500 language in subsection
(B), the indentation in the Public Law version makes it clear that the
$500 limitation applies to both. Based on that definition, a volunteer,
whether a coordinator, sponsor employee, or student, who receives more
than $500 per year as compensation for work on the VITA (Volunteer
Income Tax Assistance) program would not be protected from liability
under the Act. Characterizing the payment as a stipend does not change
the effect of the payment on the volunteer’s status under the Act.
Compensation
IRS allows partners to utilize federal grant funds to provide
stipends to volunteers within the volunteer return preparation program.
Stipends are a fixed amount of money paid at regular intervals as a
salary or to cover living expenses. Under the VITA and TCE (Tax
Counseling for the Elderly) Grant Programs, stipends are an allowable
expenditure and are specifically addressed within both grant application
booklets.
For purposes of the IRS grant programs, a stipend can only be used to reimburse volunteers for out-of-pocket expenses.
Tax Counseling for the Elderly
The Tax Counseling for the Elderly (TCE) Grant Program allows
participants to use grant funds to pay salaries, wages and benefits of
clerical personnel only.
Participants in the TCE Grant Program cannot use grant funds to provide
compensation in the form of salaries, wage and benefits of program
sponsor executives or administrators.
The TCE Grant Program allows grant recipients to provide volunteers a stipend for travel and food.
VITA Grant Program
The VITA Grant funds cannot be used to provide compensation (money given in exchange for work done) for the following positions:
- Tax Assistor/Preparer
- Screener, or
- Quality Reviewer
The VITA Grant Program allows its participants to provide
compensation (in the form of salaries, wages and benefits) for the
following positions whose roles and responsibilities, as described in
the Publication 1084, does not include the preparation of tax returns:
- Program and/or Financial Coordinator (not included in the Publication 1084)
- Site Coordinator
- Clerical Support
- Tax Law Instructor
- Interpreter
- Information Technology Specialist (Computer Specialist), and
- Any other position accepted by the Grant Program Office following prior approval
The VITA Grant Program allows grant recipients to provide volunteers a stipend for travel expenses only.
IRS Position
A volunteer who is compensated in excess of $500 annually is not
considered a volunteer under the Volunteer Protection Act and is not
protected from liability.
A partner, whether grant recipient or not, who intends to pay their
volunteers in excess of the amount stated above, should seek legal
advice from their attorney regarding potential liability for their
organization and their volunteers.
A request to change statutory language of the Volunteer Protection Act is not being pursued by the IRS.