Dear Mayor Beckwith,
You have requested an opinion of this office asking whether the City of Tallulah may make a minimum $2,600.00 contribution to Volunteer Income Tax Assistance Programs ("VITA") to help defray the Program's operating costs.
The VITA Program is sponsored by the Internal Revenue Service. According to the IRS's website, "[t]he VITA Program offers free tax help to low to moderate income (generally, $49,000 and below) people who cannot prepare their own tax returns. Certified volunteers sponsored by various organizations receive training to help prepare basic tax returns in communities across the country. VITA sites are generally located at community and neighborhood centers, libraries, schools, shopping malls, and other convenient locations. Most locations also offer free electronic filing."1 The City of Tallulah has been asked to make a minimum contribution of $2,600 towards the estimated operating cost of $13,000 for the VITA program.
Because your question involves the use of public funds, it must be examined in light of Article VII, Section 14 of the Louisiana Constitution, which provides, in pertinent part, as follows: *Page 2
Prohibited Uses. Except as otherwise provided by this constitution, the funds, credit, property, or things of value of the state or of any political subdivision shall not be loaned, pledged, or donated to or for any person, association, or corporation, public or private. . . .
The Louisiana Supreme Court has ruled that Article VII, Sec. 14 is violated whenever public funds or property are "gratuitously alienated."Directors of the Industrial Development Board of the City of Gonzales,Louisiana, Inc. v. All Taxpayers, Property Owners, Citizens of the Cityof Gonzales, 938 So.2d 11, 23, 2005-2298 (La. 9/6/06) (the "Cabela's" case). However, Louisiana Constitution
Article VII, Sec. 14(B) contains twelve exceptions to the prohibition against donating public funds. Because this donation of public funds appears to fall within one of the exceptions in La.Const. art. VII, Sec. 14(B), the three-prong Cabela's test used by our office in determining whether or not a donation is gratuitous, is not applicable.
La.Const. art. VII, Sec. 14(B)(1) provides, "Nothing in this Section shall prevent the use of public funds for programs of social welfare for the aid and support of the needy." Our office has consistently opined that in order to avail itself of this exception, the state must insure that there is some type of objective criteria to properly identify those who are needy. See Atty. Gen. Op. Nos. 01-0290, 01-86, 00-174, 99-250, 97-236.
Based on the foregoing, it is the opinion of this office that the City of Tallulah may contribute funds to the VITA Program because the funds will be used to support low income taxpayers (identified using objective criteria) prepare and file their tax returns. As you have pointed out, any refunds these taxpayers receive will benefit the City of Tallulah as citizens spend the money refunded to them. Finally, we note that you may wish to consider utilizing the provisions of Article VII, Sec. 14(C) of the Louisiana Constitution, which authorizes the state and its political subdivisions to engage in cooperative endeavors for a public purpose with governmental agencies, public or private corporations and/or individuals.
We trust this adequately responds to your request. However, if our office can be of further assistance, please do not hesitate to contact us.
Yours very truly,
JAMES D. "BUDDY" CALDWELL Attorney General
By: __________________________ Lindsey K. Hunter Assistant Attorney General
JDC/LKH/chb
1 Free Tax Return Preparation for You by Volunteers, available at http://www.irs.gov/individuals/article/0., id=107626.00.html VITA is different from the Tax Counseling for the Elderly (TCE) Programs offered by the IRS, which provide free tax help to people aged 60 and over. Id.