Self-Employment Tax Centers Help Self-Employed and Small Businesses Prepare Taxes

Every year, the IRS awards grants to local organizations that run Volunteer Income Tax Assistance (VITA) sites, offering free tax help to low- to moderate-income individuals with preparing tax returns. In 2011, the IRS launched a the Self-Employment Tax Center Pilot in 12 locations to provide additional tax filing assistance geared to the particular needs of self-employed individuals who run micro-business and those who own small businesses.

Typically, VITA sites have not been authorized to provide assistance for micro-business and small businesses filing Schedule C tax forms, which are often more complex to complete than tax filings for an individual household. The IRS is supporting the Corporation for Enterprise Development (CFED) and National Community Tax Coalition (NCTC) in administering the pilot. 

The 12 pilot sites provide the array of services found at typical VITA sites, but they also offer additional services such as trainings to educate clients about how to complete Schedule C tax returns. The sites educate clients about how self employment status impacts their tax liabilities, and share best practices for keeping accurate records.

Managers of the pilot sites are very enthusiastic about results from the first year.  “The Schedule C pilot has allowed us to reach a wider pool of potential VITA clients. Not only can we assist small business owners who need to file taxes in order to grow their business, we can also reach many people who otherwise would not be able to file taxes at all,” said Leonardo Covis of East Bay Asian Local Development Corp. (EBALDC), one of the 12 pilot sites.

In evaluating the program, NCTC found that the accuracy rate of Schedule C tax assistance at the pilot sites was highly encouraging.  The sites received a 94.7% accuracy rate overall from the IRS.

The pilot is continuing in 2012 with the same 12 pilot sites, several of which are AFI grantees (denoted by asterisks below). Grantees with VITA eligible participants can refer Schedule C participants to one of the following 12 organizations:

• AccountAbility - Minnesota St. Paul, MN
• Accounting Aid Society - Detroit, MI
• Campaign for Working Families - Philadelphia, PA*
• Center for Economic Progress - Chicago, IL
• East Bay Asian Local Development Corporation - Oakland, CA*
• El Paso Affordable Housing - El Paso, TX*
• Foundation Communities - Austin, TX*
• Just Harvest Education Fund - Pittsburgh, PA
• KC CASH Coalition, Inc - Kansas City, MO
• Real $ense Prosperity Campaign - Jacksonville, FL
• Rural Dynamics, Inc- Great Falls, MT*
• St. Mary's University - San Antonio, TX

The IRS, along with CFED and NCTC, has indicated that a small number of additional sites may be added this year. 

For more information, please contact Lauren Williams at lwilliams@CFED.org.