Low-Income Taxpayer Clinics Get High Marks

Apr 9th 2018
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Making good on her status as National Taxpayer Advocate, Nina Olson has issued a glowing annual report about low-income taxpayer clinics (LITCs).

The clinics serve a unique purpose. They work to teach low-income taxpayers and those who speak English as a second language about their rights under the tax code. The IRS favors online self-help and the agency’s cost cutbacks make it tough to get personal assistance, Olson writes.

“Tailoring  education about taxpayer rights and responsibilities to the needs of specific communities and offering the presentations in a taxpayer’s native language provide an avenue for reaching taxpayers who may otherwise be unable to overcome communication barriers with the IRS,” she states.

Through the Tax Court’s Clinical Program, the Tax Court and the LITCs join forces to reach taxpayers who may benefit from the clinics. Most clinics’ litigation efforts are in the U.S. Tax Court, “because it is the only pre-payment forum for taxpayers challenging an IRS examination decision or collection action,” Olson states. However, taxpayers may find relief by suing in a different court.

The clinics are encouraged to have pro bono panels that taxpayers can work with, staffed by volunteers who are qualified to practice before the IRS. But, though LITCs are funded through IRS grants, each clinic is independent of the IRS, Olson states.

The LITC Program Office’s recruiting efforts plus what Olson says is sound judgment in selecting federal grant recipients have boosted clinics’ growth.  In 2017, Congress allotted $12 million for the clinics, a “six-fold” increase over 1999, the report states.

The operation’s major expenses include personnel and fringe benefits paid for direct representation, education and advocacy efforts to low-income and ESL taxpayers -- totaling more than $18.3 million.

Clinics are not allowed to use funds to pay indirect expenses, such as general overhead costs.

The LITC Program Report contains both 2016 and 2017 data. Any information pertaining to clinic work, including case work, educational activities, and outreach is from 2016, the most recent year with complete data, the report states. Award amounts and related information is current through 2017 because that information is released before the start of the calendar year.

Here’s a snapshot of LITC accomplishments and what was paid to support them in 2016 and 2017.

  • In 2016, 59 percent of more than 1,800 LITC volunteers were attorneys.
  • More than half of the taxpayer cases worked in 2016 involved collection issues. The combined efforts of clinic staff and volunteers helped more than 4,200 taxpayers facing an IRS collection action and allowed them to comply.
  • In 2017, the LITC Program awarded approximately $11.8 million in grants to 138 organizations across the United States. The program’s matching grants helped fund LITCs that provide personal help to taxpayers who want to comply with the law and understand their rights and responsibilities as taxpayers. The maximum amount of an LITC grant is $100,000 per year; many clinics receive far less. Each clinic is staffed by an attorney, certified public accountant (CPA), or enrolled agent who can represent taxpayers before the IRS.
  • LITCs must have a staff member or a volunteer available to provide pro bono assistance who is admitted to practice before the United States Tax Court to handle litigation matters. Students and recent law graduates working at an LITC may be authorized to represent taxpayers before the IRS. More than 1,800 volunteers provided 47,480 hours to LITCs in 2016. More than two-thirds of the volunteers were attorneys, CPAs, or enrolled agents.
  • In 2016, LITCs held more than 2,100 events to educate more than 60,500 low-income and ESL taxpayers.
  • An unidentified LITC resolved tax problems for more than 30 victims of identity theft that stole about $5 million in false refunds. Olson’s report states only that the unnamed perpetrator was “brought to justice.”

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