1. What expenses are covered by the grant?
Generally, expenses are only allowable if they are reasonable and are costs that would not have been incurred but for the program. Examples include:
- Hardware – computers, printers and related supplies used to prepare returns
- Salary costs – clerical, program and site coordinator, tax law instructor, interpreter
- Office supplies – pens, pencils, paper, shredder
See Appendix B, Exhibit 1, for a table of the most common allowable and unallowable costs. In addition, review information available in 2 CFR Part 200, Administrative Requirements, Cost Principles, and Audit Requirements of Federal Awards for detailed information on limitations and requirements of a federal grant.
2. Are expenses associated with marketing and advertising VITA site operations covered?
Yes. Publicity and marketing of free tax return preparation activities are an allowable expense as long as they are reasonable and necessary to the program.
3. Are costs associated with completing grant reports and normal accounting and bookkeeping considered allowable costs? What about audit costs?
The salary paid to individuals responsible for compiling grant reports and maintaining accounting records may be allowable funds as long as they are incurred during the grant’s period of performance. However, the amount is limited to the portion of the salary attributable to time spent performing services that are an integral and necessary part of the program. The cost principles at 2 CFR Part 200, Subpart E – Cost Principles address the required recording of grant time. Expenses incurred outside the period of performance are not allowable. Expenses associated with the preparation of the application are not allowable.
Audit costs required in accordance with 2 CFR Part 200, Subpart F- Audit Requirements are allowable and should be pro-rated to the VITA grant based on its share of the overall federal funding expended by the organization unless it is a cost included in your indirect expense calculation.
4. May we use federal funds to pay individuals for return preparation, screening, and reviewing returns?
No. Individuals performing these activities may not be paid with federal funds from the VITA grant. If an individual performs one of these activities part of the time and other activities that can be paid with federal funds (e.g., site coordinator, interpreter, computer technician), time sheets must clearly show the time spent on the particular activity and record keeping must clearly show that no federal funds were used to pay for return preparation, screening, or reviewing returns.
5. May we use federal funds to purchase tax preparation software?
No. The IRS provides tax preparation software for use at all VITA sites. If a grantee chooses not to use the software provided, grant funds may not be used to purchase different software.
6. Is food provided to volunteers an allowable cost?
Organizations may include the cost of food provided for volunteers at VITA sites in their proposed budget. It is an allowable expense as long as the purchase meets all OMB established criteria (necessary, reasonable, allocable, and allowable). It must be incurred solely for the program and total cost may not exceed $500 per year. A reasonable proposal that includes this expense considers the number of volunteers, days and hours the site operates and type of foods provided. The cost of foods purchased in conjunction with an event considered entertainment or social activity is not allowable. Purchase of food for customers is not allowable.
7. Can expenses incurred between August 1 and award notification be covered by the grant?
Yes. Expenses incurred after the start of the grant period but before the award of the funds can be included; however, if a grant is not awarded, monies spent during this time are not reimbursable by IRS. Also, if the award amount is less than the applicant requested, allowable expenses that exceed the actual award amount are not reimbursable by IRS.
8. Can a student receive an internship or scholarship with grant funds?
No. Grant funds cannot be used for scholarships or internships.
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