Rev. Rul. 80-45

ISSUE

Are unreimbursed expenses incurred by volunteers participating in the Volunteer Income Tax Assistance (VITA) program deductible under section 170 of the Internal Revenue Code?

FACTS

VITA is an on-going program established under the auspices of the Internal Revenue Service to further the policy of the Service to help taxpayers to comply voluntarily with federal tax laws and to assist taxpayers in meeting their obligations under the tax laws. The aim of the program is to provide free assistance to low-income, elderly, and non-English speaking individuals in the preparation of their federal income tax returns. VITA volunteers are trained by the Service, which provides instructors and materials at no cost to the volunteers. When the training is completed, the Service continues to assist the volunteers by making available area coordinators (who are Internal Revenue Service employees) and by providing IRS publications and technical assistance. A special telephone number is furnished to the volunteers so that they can obtain immediate assistance. The volunteers include members of retirement, religious, and civic organizations, college students, members of social action groups, and Internal Revenue Service employees. The Service monitors the program by requiring the volunteers to place the letters "VITA" on each return they prepare under the program.

Unreimbursed out-of-pocket expenses incurred by VITA volunteers include transportation costs to and from the training and tax assistance sites and, in some instances, the cost of paper and pencils used at tax assistance sites, newspaper advertising expenses incurred to publicize provision of tax assistance, and similar items directly connected with participation n the VITA program.

LAW AND ANALYSIS

Section 1.170A-1(g) of the regulations provides that no deduction is allowable under section 170 of the Code for a contribution of services. However, unreimbursed expenditures made incident to the rendition of services to an organization contributions to which are deductible may constitute a deductible contribution. For example, out-of-pocket transportation expenses necessarily incurred in performing donated services are deductible.

Rev. Rul. 65-285, 1965-2 C.B. 56, holds that individuals invited by the Department of Justice and the Office of Economic Opportunity to attend a conference and contribute their advice and services regarding methods of meeting legal problems of the poor may deduct their out-of-pocket expenses in connection therewith under section 170 of the Code.

Rev. Rul. 67-362, 1967-2 C.B. 117, holds that retired business executives participating in the Small Business Administration's SCORE program by counseling owners of small businesses may deduct reasonable, unreimbursed expenditures necessarily incurred in providing such assistance.

HOLDING

Unreimbursed expenses for transportation, paper and pencils, newspaper advertising and similar items incurred by VITA volunteers while rendering gratuitous services pursuant to the VITA program are incurred "for the use of" the United States within the meaning of section 170(c)(1) of the Code and are deductible under section 170, subject to the limitations of section 170(b)(1)(B).