VITA, the MTC and the Modern Accounting Curriculum (Part II)

Editor: Annette Nellen, CPA, Esq.

Part I of this two-part column, in the August 2007 issue, discussed setting up a Volunteer Income Tax Assistance (VITA) program. Part II, below, addresses integrating VITA into an accounting program.

Integrating VITA into the Accounting Program

If accounting faculty members determine that the benefits of having a VITA program outweigh the costs, they must then decide on the most effective way to integrate VITA into the accounting program. This will depend on whether the accounting program has retained the traditional first course on individual taxation or has adopted the Modern Tax Curriculum (MTC) approach. The objectives of a federal individual taxation course are typically consistent with students’ participation in a VITA program. While it is difficult to adequately train students for a spring tax course by early February, those who have successfully completed a semester course on individual taxation make effective VITA volunteers. Students may still require additional VITA training, but the amount will be much less than the 40-plus hours recommended by the Service. If a second undergraduate tax class on business entities is offered, those students can be encouraged to participate in VITA to reinforce the lessons learned in their individual taxation course. However, if the accounting program has adopted an MTC approach, it will be more difficult to reconcile the first undergraduate tax course with the VITA program.

Tax Complexity, E-Filing, and the MTC

Because of the increased complexity of the tax laws, the increased use of technology in tax compliance, and the MTC’s changes to tax curricula, coordinating and operating a VITA program has become more challenging. The complexity of individuals’ financial situations makes it difficult to staff a VITA program with accounting students who are taking or have just completed their first tax course. The IRS’s extensive training materials demonstrate the complexity of the applicable federal tax law (see IRS Pub. 678, Volunteer Student Guide). Taxpayers who use a university-sponsored VITA site typically include retirees, low-income wage earners, students, and foreign students. These taxpayers may have complex issues involving the credit for the elderly or the disabled, the earned income credit, the credit for qualified retirement savings contributions, education credits, child tax credits, and child-care credits. They may have retirement distributions, unemployment benefits, tuition deductions, and, in the case of foreign students, treaty income exclusions. State income tax returns may have their own treatment of these and other issues.

While tax software helps simplify calculations, it requires installation and setup, and students must be trained to use it. E-filing brings an additional layer of complexity. Taxpayers who want to e-file must provide accurate Social Security numbers and the prior year’s adjusted gross income figures. If taxpayers fail to qualify for e-filing, student volunteers must be prepared to produce paper returns. E-filed returns may be rejected days after they have been prepared; thus, someone must contact the taxpayer, correct the errors, and electronically resubmit the returns. The type of detailed technical training needed by VITA volunteers is in stark contrast to the broader content coverage of the MTC; see AICPA, “Model Tax Curriculum”.

MTC: The MTC, in the first course, exposes students to general tax concepts and tax issues related to individuals, partnerships, corporations, and S corporations. It deemphasizes the coverage of individuals to focus on business entities, which are arguably more relevant to four-year accounting students. While the MTC allocates substantial time to general concepts applicable to any taxpayer, its individual taxation coverage is limited to five hours of class instruction in the first undergraduate course. The second MTC undergraduate course contains only two hours on sole proprietorships and does not otherwise emphasize individual taxation. The end result is that accounting students who have taken the undergraduate MTC require more out-of-class training before they can effectively participate in the VITA program. This requires a greater student commitment and makes VITA staffing or recruitment more difficult for programs that have adopted the MTC approach. However, participation in a VITA program is a useful supplemental educational activity for students pursuing a career in public accounting. Similarly, participation in VITA is entirely consistent with the MTC’s emphasis on developing communication and leadership skills, strategic and critical thinking skills, technological competency, and business and professional ethical awareness. The MTC creates a dilemma: Students who could benefit from additional coverage of individuals may not have the time to train and participate in a VITA program. Student volunteers need sufficient time in their schedules to complete the VITA training and make it a successful and educationally beneficial experience.

Elective VITA Service-Learning Courses

An obvious solution to the paradox would be to move away from the MTC approach and go back to the traditional first course on individual taxation, but students taking only one tax class would then receive little or no coverage of business-entity taxation. Another option is for accounting faculty to develop an elective VITA service-learning course for their curriculum. The course would be a hybrid between the course-required approach and the true-volunteer program.

Benefits: One advantage of this option is that student participation is truly voluntary. The students are motivated by both the opportunity to provide service to their community and the educational experience they will receive by participating in the program. They are, however, accountable for their attendance and performance (as in any other academic course). Another advantage is that both faculty members and students can allocate time in their schedules for VITA. Engaging in the VITA program over an entire semester allows sufficient time to accomplish educational objectives. The program is assured a definite number of student volunteers who can be required to attend VITA sessions. Accounting students who are likely to enroll in a VITA service-learning course are likely to be pursuing a career in public accounting. Depending on state law, the course may count toward the hours required to sit for the CPA examination. In states that have adopted the 150-hour requirement, the course may count toward that requirement.

Burdens: A disadvantage is that accounting students may not choose to enroll in the course. Students pursuing a career in public accounting may opt for a graduate degree to satisfy the 150-hour requirement. Others may choose easier courses as electives. This makes fall recruitment for the VITA service-learning course just as important for this elective as it is in the true-volunteer VITA program.

Conclusion

The VITA program has been around for decades and has been used by universities to give accounting students practical experience while serving the local community. At some universities, VITA has been offered as a true-volunteer program, and at others it has been a course-required program. However, changes in the tax law, technology, and tax curricula have caused the program to become too complex to operate easily as an extracurricular activity or as a class project in an undergraduate federal tax course following the MTC approach. While these changes have made operating the VITA program more challenging, they have also increased the educational benefits associated with participating in the program. Today’s VITA program involves management, marketing, information systems, and accounting functions, while giving participants the opportunity to practice communication, interpersonal, technology, research, problem-solving, and analytical skills. It provides a vehicle for discussing ethics and introducing students to professional community service. The VITA experience, if structured correctly, is a dynamic program that can be used to accomplish many contemporary educational goals.

Developing and offering a VITA service-learning elective accounting course has many advantages. It is a hybrid of the true-volunteer and the course-required programs and has the advantages of both approaches. Accounting students have sufficient time to acquire technical knowledge and develop skills through semester-long participation. They are given the opportunity to become a well-trained group of reliable volunteers providing an important service to their community.

There is one major challenge to this approach. Students must be attracted or recruited to enroll in the course. That challenge is the same faced when any accounting elective is offered. It is an issue for any service organization seeking volunteers. The student volunteers must be able to see the advantage of their service. Given the potential educational and community benefits involved, it is a challenge many accounting faculty will find worthwhile.

Prof. Nellen is a former member of the AICPA Tax Division’s Tax Executive Committee and a current member of the AICPA Tax Division’s Individual Income Tax Technical Resource Panel. For more information about this column, contact Prof. Nellen at anellen@sjsu.edu, Prof. Long at blong@usi.edu, or Prof. Kocakulah at mkocakul@usi.edu.