November 11, 2022
Tax, Tax, Tax
“Many people need tax help all year.” “Do you need help with your tax return?” “Get your taxes done at a free tax clinic.” Do you want to be a “volunteer tax preparer”? Learn how to “safeguard taxpayer information.” Register to be a volunteer with the “Community Volunteer Income Tax Program.” “Volunteers are most busy during tax season.”
Sound familiar? No doubt it probably is for CVITP volunteers and host organizations. All of the above statements are taken from the Canada Revenue Agency or CRA’s webpages for the CVITP.
“Tax help”, “tax return”, “tax clinic”, “tax preparer”, “taxpayer”, “tax season”. There’s one common term in them all: tax. Yet, ask yourself, how many of the CVITP clients that you deal with pay income taxes? Is this really why people come to our CVITP clinics?
Benefits, Benefits, Benefits
There are some clients who owe taxes. But for that small percentage of clients, filing a return may be just as much about getting a refund on income tax that had been deducted at source as paying income taxes still owed.
For the majority of CVITP clients, they do not come to CVITP clinics to pay income tax – although some may be afraid of coming because they fear discovering that they owe the government money.
No, the majority come because they know, from prior experience, that they can only continue to get important federal and provincial/territorial benefits if they file a return each year. And the number of benefits conditional upon filing a return is not only large but on a trend to continue expanding.
Did you know?
Given this reality, the CRA’s fixation on using the term “tax” is a bit bizarre. For one, the CRA switched some years ago from calling it a “tax return” to an “income tax and benefit return”. This reflects the fact that the return preparation and filing process is increasingly being used by the federal government as well as provincial/territorial governments as a tool for assessing and delivering benefits.
But as can be seen on many of its own web pages, the CRA is inconsistent in its language just on this item, moving randomly between using the expressions “tax return”, “income tax return” and “income tax and benefit return”.
Does it matter?
Maybe it doesn’t matter that the CRA continues to use language which ignores its current client group’s own experience. After all, these clients come to the CVITP clinics anyway.
However, the problem is that many potential CVITP clients don’t come forward to file a return. How many? The CRA admits it just does not know. Robson and Schwarz suggest as many as 10 to 12 percent of Canadians do not file; as a result, they estimate approximately $1.7 billion in benefits were left unclaimed in 2015 alone.
The CRA should care about the problem. This is because its official mandate is not just to collect federal taxes but also to distribute many federal benefits. This is reaffirmed in every Departmental Results Report (DRR) produced by the CRA.
The CRA’s DRR for fiscal year 2020-21 states that “The CRA’s core responsibility for benefits is to ensure that clients obtain the support and information they need to know what benefits they may be eligible to receive, that they receive their benefit payments in a timely manner, and have avenues of redress when they disagree with a decision on their benefit eligibility.”
This has been reinforced more than once in the Minister of National Revenue’s mandate letters from the Prime Minister. At various times, she has been instructed to “ensure that CRA is a client-focused agency that will proactively contact Canadians who are entitled to, but are not receiving, tax benefits” and to “to modernize the CRA to provide a seamless, empathetic and client–centric experience.”
The CRA can legally oblige residents who have taxable income to file a return. But while the CRA cannot legally oblige residents who have no taxable income to file a return, the federal government wants the CRA to encourage residents with no taxable income to file a return.
Why? Because the federal government (and by extension many provincial/territorial governments) has made the return preparation and filing process an essential step in the process of accessing many of the benefits that the federal government uses to reduce poverty.
To achieve the targets it set out in its 2018 Poverty Reduction Strategy, the federal government wants to make it as easy as possible for all residents to file their returns.
A marketing challenge
The CVITP is an important part of this effort: it provides free return preparation and filing services for low-income residents who do not have the means to prepare and file their return themselves or to pay an expert to do it for them.
As emphasized in our article on non-filers, there’s a lot more to reaching clients who don’t file returns than just marketing the CVITP differently. But marketing the CVITP differently would be a good place to start.
We are not suggesting that the CRA change the name of the Community Volunteer Income Tax Program, as it may feel it has built up “brand recognition” around the name. Nor are we suggesting that the CVITP is only about benefits.
But presently, the language – and associated actions – are too heavily focused on income tax. If it wants more low-income residents to make use of the CVITP, the CRA needs to adopt a more balanced approach. Among other things, this means marketing the CVITP in a way which better reflects the situation of its current and potential clients and demonstrates that the CRA is sensitive to this fact.
For example, the CRA could start by changing the language in its promotional material. Instead of speaking about free tax clinics where taxpayers can get their tax returns prepared and filed for free by volunteer tax preparers, the CRA could refer to free tax and benefit (or return) clinics where clients can get their returns prepared and filed for free by volunteers knowledgeable about taxes and benefits for low-income residents.
If the CRA uses different promotional language that is more relevant to current and potential CVITP clients, its host organizations can be expected to follow suit. This is especially important because, in most communities, it is the host organizations and not the CRA which promote the CVITP clinics to current and potential CVITP clients.
Beyond marketing: changing the CRA’s approach to the CVITP
Changing the way the CRA markets the CVITP makes it sound like it’s an isolated problem with an easy fix. But we believe the mismatch between the CRA’s current marketing messages and the reality on the ground is indicative of a larger challenge: the CRA needs to update its vision of the CVITP.
It is no longer just a free tax preparation service. It has also become – and arguably more importantly – a community-based service which helps low-income residents maintain their access to important poverty reducing benefits. The evolution of the income tax and benefit system and the return preparation process it employs have driven this change.
A realistic appreciation of the two functions currently carried out by the CVITP suggests the CRA needs to embrace a different approach to its administration of the CVITP. This new approach should emphasize the dual function throughout four stages (i.e., recruitment, training, supervision and support, recognition and retention) in the administration of the CVITP’s service delivery.
Although not the focus of this article, we offer two examples below to illustrate the broader implications for the CRA in adopting this different approach. (More examples will follow in future articles.)
1The CRA’s CVITP website says that for volunteer “tax preparers”: “The CRA offers training and support, but if you are filing returns electronically, you should be comfortable using a computer and have a basic understanding of how to do taxes [our emphasis].” Most volunteer (income tax and benefit) return preparers may have a basic understanding of how to prepare and file returns. If they are a middle-income resident, they likely pay income tax.
But then they may not be at all familiar with the many benefits which are means-tested and for which low-income residents are eligible. This has a direct bearing on the training provided to CVITP volunteer return preparers: they need to learn about the federal and provincial/territorial benefits which low-income resident can claim.
2As we have already noted in another article, rolling up all the benefits generated by filing returns for clients is a unique and highly informative way for the CVITP clinic administrator to demonstrate to their organization’s management just how important the CVITP service is for the host organization’s clients. This could raise the profile of the CVITP service within multi-service host organizations, encouraging management to treat it more generously with its time and the organization’s budget.
Equally important, for host organizations dependent on donor and community support, these amounts tell an important story about the impact of the CVITP service in helping to reduce poverty within the community. This data is a crucial piece that host organizations would like to use in garnering additional donor support for their CVITP clinics.
Yet, while many host organizations would like to have the data, few do.
By providing data to individual host organizations on the benefits generated by their CVITP clinics for their clients, the CRA would be helping CVITP clinic administrators to demonstrate the importance of these clinics to senior management, their local community and donors. Such a practice would signal that the CRA recognizes the impact of host organizations’ CVITP service. It might also contribute to retaining their future participation in the CVITP.
Conclusion
A more balanced approach that places greater emphasis on the CVITP’s role in helping access poverty reducing benefits would reflect the main reason why clients want their returns filed and why the federal government wants low-income residents to file their returns.
If the CRA is to adopt this new approach, not just with respect to marketing the CVITP but more broadly, the CRA will need to think differently about the CVITP. It will need to become more “client-centred” and “empathetic” in communicating with residents about the many benefits to which they are entitled.
This will prove difficult for an agency that has traditionally focused its efforts on ensuring that residents comply with their tax obligations. But if it is to change its behaviour, it will need to drop its ambivalent attitude toward the CVITP.