Increasing uptake of scan-and-go tax services with decision aids

Background

The IRS’s Volunteer Income Tax Assistance (VITA) program sponsors sites around the nation where low-to-moderate income (LMI) filers can have their taxes prepared for free. However, only 3% of qualifying returns were prepared at VITA sites. Over 62% of filers used a paid preparer. This means that many people are paying an average of $273 to have their taxes done by a paid preparer.

We partnered with United Way of Tucson and Southern Arizona (UW) to address how to increase uptake of Valet VITA, a a scan-and-go version of the IRS’s drop-off filing services. Valet VITA allows filers to be interviewed, have their documents scanned to a secure cloud platform, and leave with all their documents in hand – a process that takes 15 to 20 minutes. Their returns can either be picked up at the same site or sent to them through encrypted email about one week later.

Each year, UW serves approximately 2,500 taxpayers in the Tucson area through their VITA sites. Their Valet VITA system serves as a model for many organizations similarly seeking innovative solutions. The service significantly cuts down on wait times at VITA sites for those who opt in while also providing an opportunity to take advantage of other on-site services, such as tax time savings, access to banking tools for the unbanked, and more. Even though the standard model of filing taxes is often more time-consuming than Valet VITA, taxpayers have not changed their behaviors during tax time to include consideration of these other service delivery models.

Key Insights

In a brief behavioral diagnosis, due to the time constraints of the tax season, we held meetings with UW to explore the preparation process in-depth and discuss the barriers that prevent tax filers from choosing Valet VITA. Through this process, we established that the following barriers likely come into play when filers make their decisions for how to prepare their taxes:

1. People are rarely offered the services of Valet VITA unless the site is too busy to take in-person returns. Many site volunteers have been working at VITA sites for years and are hesitant to incorporate new services into their routines unless they deem them helpful and necessary.

2. People prefer to do their taxes with someone in person so they can ask questions and check that the taxes are done correctly. Currently, the Valet VITA process feels less personalized, as people are used to preparing their taxes while sitting on-site with their preparer.

3. People set the day aside with the goal of getting their taxes done and would rather wait than try an unfamiliar process that takes longer to complete. Even though Valet VITA saves time on-site, the overall process is extended to at least a week while taxes are sent to the preparation hub. For many people, this means that they feel as if the process isn’t yet complete, and that they have to wait to find out the amount of their refund.

Experiment

We chose to implement a test at VITA sites where site greeters would hand filers small sheets informing them about the two options available to file their taxes. We addressed the barriers above by testing different psychological appeals to nudge people towards using Valet VITA:

1. Control: Simply informing filers about their two options for filing.

2. Ego Appeal: Congratulating people on qualifying for Valet VITA in order to make it feel like a unique and coveted service.

3. Decision Aid: Highlighting the different circumstances under which people should use Valet VITA.

Results

Due to difficulties with implementation on-site, our sample size was smaller than we originally anticipated. Out of the 2,535 total filers who came into UW’s VITA sites, only 559 filers received one of the three slips.

Yet, we still found some interesting results. The decision aid sheet was most effective, with 28.2% of filers who received this sheet choosing to file with Valet VITA, compared to 16.4% who received the control slip.

As a result of this pilot, over a quarter of filers prepared their taxes with Valet VITA. This increase in uptake also translates to time saved for UW.

This means that with a full rollout, they would be able to increase their impact by serving even more taxpayers due to the time saved with increased use of Valet VITA.

In a full rollout to the approximately 3,000 taxpayers that UW serves each year, we estimate that this intervention would lead to 846 people filing with Valet VITA, translating to approximately 3,000 hours saved in on-site waiting time.

We are continuing our partnership with UW to test another intervention to further increase uptake of Valet VITA, as well as a broader test to increase uptake of all VITA services among people who currently use paid preparers to file their taxes.