1. Introduction: What is Form 13981?

IRS Form 13981, officially titled the VITA Grant Agreement (or Grant Agreement: VITA), is a formal federal award contract published by the Internal Revenue Service (IRS). The IRS operates as a federal bureau under the United States Department of the Treasury, administering the internal revenue code and distributing federal grants that support free community tax preparation.

Unlike personal tax returns or business income schedules, Form 13981 is an institutional legal contract. It is administered by the Stakeholder Partnerships, Education and Communication (SPEC) division within the IRS Wage and Investment Division.

Form 13981 serves as the official legal agreement between the federal government and an organization selected to receive a federal grant under the Volunteer Income Tax Assistance (VITA) Matching Grant Program. By executing this document, the recipient organization formally accepts the grant award and legally commits to fulfilling the approved budget, matching fund obligations, and tax return production goals.

2. Purpose of the Form

When an organization wins a competitive federal VITA grant, federal grant regulations require a binding bilateral contract before federal funds can be disbursed. While the organization originally applied for funding in May, Form 13981 establishes the final legal terms and conditions of the award announced in the fall.

Form 13981 defines the financial and operational boundaries of the grant. It specifies the exact amount of federal funds obligated to the recipient, the mandatory dollar-for-dollar non-federal matching requirement, the official period of performance, and the minimum number of federal tax returns the program must prepare.

Executing Form 13981 binds the recipient to the compliance standards detailed in IRS Publication 5247 (VITA Grant Terms and Conditions), Title 2 of the Code of Federal Regulations (2 CFR Part 200), and federal civil rights laws. Most importantly, a fully executed Form 13981 serves as the administrative key that authorizes the IRS to activate the grantee’s drawdown account in the federal Payment Management System (PMS).

3. Who Needs to File This Form

Form 13981 must be completed and executed by organizations that have been officially awarded federal VITA grant funding under Assistance Listing Number 21.009. Eligible recipients include:

Non-Profit 501(c)(3) Organizations: Community action agencies, United Way chapters, and charitable coalitions accepting a VITA grant award.
Municipal & Local Governments: City, county, or regional government departments that operate public volunteer tax assistance programs.
Colleges & Universities: Academic institutions awarded federal funds to support student-run community tax clinics.
Financial Institution Coalitions: Credit unions, community development financial institutions (CDFIs), and banks managing grant-funded volunteer sites.
Multi-Year Grantees: Organizations entering year two or year three of an approved multi-year grant cycle who must re-execute the agreement annually to accept continuation funds.

The agreement must be signed by an official who holds the legal authority to bind the recipient organization, such as an Executive Director, Chief Executive Officer, Board President, or authorized municipal official.

4. Who Is Exempt / Not Required to File

Because Form 13981 is strictly an award acceptance contract for organizations winning federal VITA grants, most entities and individuals are exempt from filing it:

Individual Taxpayers: Community members receiving free tax preparation services never see or sign this agreement.
Individual Tax Volunteers: Volunteer preparers, greeters, and quality reviewers certify their individual participation on Form 13615, not Form 13981.
Non-Grant Sponsoring Partners: Organizations that operate VITA clinics without federal cash grants partner under Form 13533 and do not sign Form 13981.
Tax Counseling for the Elderly (TCE) Recipients: Organizations receiving TCE grant awards execute Form 9661 (Cooperative Agreement for TCE) rather than Form 13981.
Unsuccessful Applicants: Organizations that applied for a grant but were not selected for funding do not complete post-award agreements.

5. When to File

Form 13981 operates under a strict, time-sensitive acceptance window governed by IRS Publication 4883:

Strict 20-Day Acceptance Deadline: Form 13981 must be signed and returned within 20 calendar days from the date printed on your official award notification letter (typically received in late September or early October).
Period of Performance: The agreement governs operations and expenditures across the federal grant year running from October 1 through September 30.
Annual Execution: Even for approved multi-year grant recipients, a new Form 13981 is issued and executed annually prior to the start of each new grant year.

Failing to return your executed Form 13981 within the 20-day window can result in the IRS rescinding the grant award and reallocating the funds to an alternate applicant on the waiting list.

6. Where and How to File

Form 13981 cannot be filed through commercial tax preparation software. It is an administrative legal document handled directly through official IRS grant management channels.

The recipient’s authorized official reviews and signs the document, and the completed PDF is submitted electronically via email directly to the assigned IRS Grant Officer or Tax Analyst. Alternatively, it can be transmitted to the general IRS Grant Program Office inbox at Grant.Program.Office@irs.gov or uploaded through the official VITA Grant portal as directed in your award notification letter.

Form 13981 must be accompanied by your finalized Form 13979-A (VITA Grant Budget and Narrative) and proof of matching funds. If your municipal or institutional charter requires physical original signatures, deliver materials to the specific IRS address as per instructions outlined in IRS Publication 4671. Always maintain a fully countersigned copy in your permanent legal files.

7. Step-by-Step Instructions to Fill the Form

Form 13981 is pre-populated by the IRS with the specific terms of your federal award. The recipient reviews the award terms and executes the signature block. Review the table below for a section-by-section breakdown.

Section	Award Element	Legal Description & Instructions
General Information	Recipient Profile	Verifies the organization’s legal name, primary administrative address, and active Unique Entity Identifier (UEI).
Award Identification	FAIN & Award Date	Displays the unique Federal Award Identifier Number (e.g., 25VITA0123) and the official federal award date.
Operating Period	Period of Performance	Establishes the binding grant operating window, running from October 1 through September 30.
Financial Obligation	Federal Funds Awarded	Displays the total amount of federal funds obligated to your program and the approved total program budget.
Cost Sharing	Matching Funds Required	Establishes the mandatory 100% non-federal matching requirement that your organization must contribute.
Production Goals	Minimum Federal Returns	Sets the minimum number of federal tax returns your program is contractually obligated to prepare and file.
Statutory Terms	Publication 5247 Compliance	Incorporates federal grant rules, including Continuing Resolution disclosures and the ban on paying preparers.
Execution Block	Authorized Signatures	Signed and dated by the IRS Grant Officer and countersigned by the recipient’s authorized corporate official.

Understanding Key Contractual Commitments

Signing Form 13981 legally commits your organization to several core federal standards:

Minimum Federal Returns: Form 13981 specifies a contractual production target. Grantees are expected to achieve at least 90% of this minimum return target by the end of the season to remain in good standing.
Strict 1:1 Matching Requirement: You legally agree that every dollar of federal money drawn from the Payment Management System will be matched by at least one dollar of non-federal cash or allowable in-kind contributions.
Ban on Paid Tax Preparers: By signing, you certify that no federal grant funds will be used to pay wages or compensation to individuals who screen taxpayers or prepare tax returns. Preparers must be unpaid volunteers.
Period of Performance Restrictions: Grant funds can only cover allowable costs incurred between October 1 and September 30. Expenses incurred before or after these dates are unallowable.

8. Required Documents/Information Needed Before Filling

Before executing and returning Form 13981, assemble the following organizational and financial records:

The Official Notice of Award: The formal notification letter from the IRS detailing the approved federal grant amount and conditions.
Companion Form 13979-A: The finalized VITA Grant Budget and Narrative matching the approved federal award amount.
Matching Fund Commitments: Written letters of commitment, board resolutions, or grant agreements proving your organization has secured 100% non-federal matching funds.
SAM.gov Registration & UEI: Verification that your organization’s registration in the System for Award Management is active and current.
Corporate Signing Authority: Organizational bylaws, board resolutions, or administrative policies proving that the signing individual has the legal authority to bind the entity.
Publication 5247: A copy of IRS Publication 5247 (VITA Grant Terms and Conditions), which is incorporated by reference into the agreement.

9. Common Mistakes to Avoid

Errors during the award acceptance process can delay funding or invalidate your contract. Avoid these frequent mistakes:

Missing the 20-Day Window: Failing to sign and return Form 13981 within 20 calendar days is the most common reason awards are rescinded.
Signing Without Legal Authority: Allowing a site coordinator, volunteer leader, or tax preparer to sign the agreement invalidates the contract. It must be signed by an authorized corporate officer or executive.
Submitting Without Form 13979-A: Form 13981 cannot be processed alone; it must be submitted alongside your finalized budget and narrative.
Overlooking the Minimum Return Number: Failing to review the “Minimum federal returns to be accomplished” figure can lead to contractual surprises during year-end evaluation.
Incurring Early Expenses: Spending money in August or September before the October 1 period of performance begins violates grant terms and results in disallowed costs.

10. Penalties for Non-Filing or Errors

Because Form 13981 is an administrative grant contract rather than a tax return, failing to execute it does not trigger civil tax penalties. However, the legal and operational consequences are immediate:

Award Rescission: If your organization fails to return the signed agreement within 20 days, the IRS will cancel the grant award and reallocate the funds to another organization.
Payment Management System Holds: The IRS will not activate your organization’s account in PMS, preventing you from drawing down grant funds to pay for clinic operations.
Grant Recoupment (Clawback): If your organization breaches the terms outlined in Form 13981—such as failing to meet the 1:1 match—the IRS will demand repayment of federal grant dollars.
Loss of Multi-Year Grant Status: Grantees that fail to maintain compliance risk losing continuation funding for years two and three of a multi-year award.
False Statements Liability: Intentionally falsifying organizational authority or matching fund certifications on federal grant contracts violates 18 U.S.C. Section 1001, exposing individuals and entities to criminal prosecution and civil False Claims Act penalties.

11. Related Forms or Schedules

Form 13981 operates at the center of the federal VITA grant compliance and management family:

Form 13977: VITA Grant Budget Plan (initial application budget)
Form 13978: Projected Operations VITA Grant Application (operational plan)
Form 13979: VITA Grant Final Expense Report (year-end financial closeout)
Form 13979-A: VITA Grant Budget and Narrative (award acceptance budget)
Form 13980: VITA Grant Performance Measures Report
Form 13533: VITA/TCE Partner Sponsor Agreement
Standard Form 424: Application for Federal Assistance
Standard Form 425: Federal Financial Report
Publication 4671: VITA Grant Program Overview and Application Instructions
Publication 4883: Grant Programs Resource Guide for VITA and TCE
Publication 5247: VITA Grant Terms and Conditions

12. Frequently Asked Questions

What does signing Form 13981 legally obligate our organization to do?

Signing Form 13981 binds your organization to deliver the VITA program as approved, achieve the minimum return targets, provide a 100% non-federal match, enforce civil rights protections, and comply with all terms in Publication 5247 and 2 CFR Part 200.

Who in our organization is authorized to sign Form 13981?

The form must be signed by an individual with legal corporate authority to execute contracts on behalf of the recipient entity, such as an Executive Director, Chief Executive Officer, Board President, or authorized County Executive. A site coordinator cannot sign unless formally delegated.

What is the “Minimum Federal Returns” number on Form 13981?

This number represents the baseline volume of federal tax returns your program is contractually expected to prepare and file during the grant year. The IRS expects grantees to achieve at least 90% of this target by the end of the season.

What happens if our organization cannot return Form 13981 within 20 days?

If you anticipate delays due to board meeting schedules or corporate approvals, contact your assigned IRS Grant Officer immediately. The IRS may grant a brief administrative extension, but failing to communicate will lead to award cancellation.

How does Form 13981 differ from Form 13533?

Form 13533 is the general Partner Sponsor Agreement that all VITA/TCE partners sign to commit to civil rights and quality standards. Form 13981 is the specific legal financial award contract executed only by organizations receiving federal cash grant awards.

When can our organization start drawing down grant funds after signing?

Once the IRS receives and countersigns Form 13981 and approves your Form 13979-A budget narrative, your grant analyst activates your account in the federal Payment Management System (PMS). Drawdowns typically become available around October 1.

13. Conclusion: Key Takeaways Summarized

IRS Form 13981 is the definitive legal contract that turns a VITA grant award into active operational funding. Executing the agreement properly ensures your program launches smoothly. Remember these core takeaways:

Binding Federal Award Contract: Form 13981 establishes the legal agreement between your organization and the IRS for the VITA Grant Program.
Strict 20-Day Deadline: Sign and return the agreement within 20 calendar days of receiving your Notice of Award.
Executive Signature Required: Ensure the document is executed by an authorized corporate official with legal signing power.
Obligates Core Standards: Binds your program to minimum return benchmarks, a 100% non-federal match, and the terms of Publication 5247.
Submit with Form 13979-A: Return Form 13981 alongside your finalized budget and narrative directly to your assigned IRS Grant Analyst as per instructions in Publication 4883.

IRS Form 13981 Guide: VITA Grant Agreement Acceptance Rules