Tax Counseling for the Elderly (TCE)

Tax Counseling for the Elderly, usually shortened to TCE, is a program authorized by section 163 of the Revenue Act of 1978 under which the IRS enters into agreements with "private or public nonprofit agencies or organizations for the purpose of providing training and technical assistance to prepare volunteers to provide tax counseling assistance for elderly individuals in the preparation of their Federal income tax returns." The implementing regulation states the objective as free assistance "to elderly taxpayers age 60 and over," delivered by volunteers "under the direction of non-profit agencies and organizations that have cooperative agreements with the Internal Revenue Service." In practice it is the free tax-preparation program for older taxpayers, and the one whose eligibility rule asks how old you are rather than how much you earn.

The program's legal home is unusual. Section 163 was never written into the Internal Revenue Code; it stands on its own in the Revenue Act of 1978, and its working rules sit in a short subpart of the Treasury regulations, 26 CFR 601.801 through 601.806. That is one of the two structural differences from Volunteer Income Tax Assistance, which Congress placed in Code section 7526A in 2019 and funds through matching grants. The other is the funding instrument. TCE runs on cooperative agreements, which the regulation says are used "in accordance with the Federal Grant and Cooperative Agreement Act of 1977," and which set out the duties of the IRS and the sponsor, the maximum award, the services for each geographic area, and the other requirements in the sponsor's application. Awards are generally competitive. A sponsor must be a private or public nonprofit "with experience in coordinating volunteer programs," and the regulation expressly bars federal, state and local government agencies from becoming sponsors. The IRS publishes the application package and operating guidance as Publication 1101.

What the money is for is spelled out. The IRS may reimburse volunteers, through their sponsors, "for transportation, meals, and other expenses incurred by them in training or providing tax counseling assistance," and may supply training, publicity materials, technical publications and "preferential access to Internal Revenue Service taxpayer service representatives" for questions that come up during the work. Volunteers are not federal employees and are not paid; the regulation says service as a volunteer "shall not be considered service as an employee of the United States," while making the federal criminal prohibition on disclosing tax information, 18 U.S.C. 1905, apply to them "as if they were employees." Sponsors must obtain written confidentiality assurances from everyone involved, and volunteers "will normally be required to pass tests designed to measure their understanding of Federal tax subjects on which they will provide tax return assistance."

The eligibility rule is the part most people get wrong, because the companion program's rule is about income. The regulation defines an "elderly individual" as "an individual age 60 or over at the close of the individual's taxable year with respect to which tax return preparation assistance is to be provided," adds that "Where a joint return is involved, assistance may be provided where only one spouse satisfies the 60 year age requirement," and says nothing about income at all. A retiree with a substantial pension qualifies; a 55-year-old on a small income does not, though that person may qualify for Volunteer Income Tax Assistance instead. The regulation also fixes the calendar: most assistance is given "during the period for filing Federal income tax returns, from January 1 to April 15 each year," with recruiting in October, training and testing in December and January, and reporting and evaluation in May and June.

Two neighbors are worth naming so they are not confused with this one. Volunteer Income Tax Assistance serves people on lower incomes, people with disabilities and people with limited English, under its own statute and its own grant program; many physical sites are branded "VITA/TCE" because one sponsor operates both, but they remain two programs. Low Income Taxpayer Clinics, authorized by Code section 7526, are a third thing entirely: they represent low-income taxpayers in disputes with the IRS and do not prepare returns. And the IRS itself notes that "a majority of the TCE sites are operated by the AARP Foundation's Tax Aide program," which is why a taxpayer searching for a TCE site is usually pointed to AARP's site locator during the filing season. Tax-Aide is the largest sponsor, not another name for the program.

1. The IRS funds sponsors. Each year the IRS enters into cooperative agreements with nonprofit organizations that have experience running volunteer programs. The agreement names the geographic area, the services and the maximum award. Sponsors apply using the package in Publication 1101.

2. Sponsors recruit, train and test volunteers. Volunteers study the federal tax subjects they will handle and must pass tests before they can prepare returns. They sign confidentiality assurances and are reimbursed for their own expenses rather than paid.

3. Sites open for the filing season. From January through the April deadline, sites operate in libraries, community centers and similar locations. A taxpayer who is 60 or over by the end of the tax year, or whose spouse is on a joint return, brings identification, income documents and last year's return.

4. A volunteer prepares and files the return. The return is prepared and, in most cases, filed electronically at no charge. The IRS supports the sites with technical materials and a dedicated line into its taxpayer service staff.

Consider an example. Ruth is 67 and her husband Dale is 58. Their income is a pension, Social Security and a little interest, and last year they paid a preparer $240 to file a joint return. Because Ruth was 60 or over at the close of the tax year, the couple qualifies for Tax Counseling for the Elderly even though Dale is not, and even though their income would put them outside the companion program's guideline. They book a slot at the nearest site in February, bring their Forms SSA-1099, 1099-R and 1099-INT, and leave with the return filed. The saving is the whole $240, and the volunteer's questions about how much tax was withheld from the pension prompt Dale to file a new withholding certificate with the plan.

Pros

• It is free, by regulation rather than by a sponsor's choice.
• Eligibility is a simple age test, so a retiree's income level never disqualifies them.
• Volunteers are trained and tested on the subjects they handle, and the program has been authorized since 1978.
• Sites operate during the filing season, and AARP's locator makes them easy to find.

Cons

• It is seasonal. Most sites operate only from January through the filing deadline.
• Volunteers prepare returns within the scope they are certified for, so a return with unusual or complex items may fall outside what a site will take on.
• A site sets its own hours and may work by appointment, so the timing is the site's rather than the taxpayer's.
• It prepares returns; it does not represent a taxpayer in a dispute with the IRS, which is what Low Income Taxpayer Clinics do.