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March 22, 2021

NTA Blog: Not all Superheroes Wear Capes: Join the Low Income Taxpayer Clinic Community and Be a Hero to Taxpayers Most in Need

 

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What do these individuals have in common?

  • A survivor of domestic violence represented by a Low Income Taxpayer Clinic (LITC) was able to establish that she shouldn’t be held responsible for a large IRS tax liability when her abusive husband had both earned the income and had hidden it from her.
  • A 70-year-old disabled veteran was facing a utility shutoff and eviction when the IRS was levying 70 percent of his Social Security income for his outstanding taxes. The LITC helped stop the levy and helped the taxpayer settle the debt using an offer in compromise to pay what he could afford.
  • A father of four who spoke English as a second language was denied three years of Earned Income Tax Credit (EITC) because he had difficulty proving his children lived with him. After an LITC intervened, not only was he able to support his entitlement to the EITC, receiving thousands of dollars in tax refunds, the IRS removed the ban that would have prevented him from claiming the EITC for two years.

Answer: An LITC stepped in and made a difference for these taxpayers and many others.

LITCs are often the last resort for taxpayers who have nowhere else to turn. These are just three examples of how LITCs, through their powers of persuasion and vociferous advocacy, helped ensure justice and the upholding of taxpayer rights for these and thousands of other taxpayers across the country. Grow the LITC presence and be a hero in your community by applying for an LITC grant!

On March 15, the IRS announced the opening of a supplemental grant application period for the LITC Program. This is a chance for an organization not currently receiving an LITC grant to apply for funding. The supplemental grant application period runs from March 15 to April 16. Generally, organizations interested in an LITC grant must apply for funding each year, but those selected during this supplemental application period will receive a grant that will cover July 1, 2021, through December 31, 2022. Grant funds can be awarded for start-up activities. All supplemental applications must be filed electronically in Grants.gov by 11:59 p.m. Eastern time on April 16.

Join the League of Tax Justice

The IRS remains committed to achieving maximum access to representation for low-income taxpayers and strives to have sufficient clinic coverage in each state, plus the District of Columbia and Puerto Rico. In addition, the IRS tries to expand clinic coverage in areas that are underserved. Despite these goals, there remain areas with no clinic at all, or insufficient clinic coverage, and we are looking for interested clinics for these and other underserved areas. Consequently, priority consideration will be given to qualified applicants that can provide services in underserved areas. At present, Nevada, North Dakota, West Virginia, Wyoming, and Puerto Rico need the services of an LITC. Additionally, parts of Arizona, Florida, Idaho, and Pennsylvania have gaps in coverage and need expanded coverage.

The LITC Program is a matching federal grant program that provides up to $100,000 per year to qualified organizations to represent low-income taxpayers in controversies with the IRS and provide education and outreach to taxpayers who speak English as a second language (ESL taxpayers). Thus, for every dollar of funds the IRS awards, the LITC is required to provide a dollar of matching funds, which includes cash or third-party in-kind contributions (e.g., volunteer time, supplies, office space).

The LITC Program protects taxpayer rights by providing access to representation for low-income taxpayers. Achieving a correct outcome should not be dependent on a taxpayer’s ability to pay for representation. As many low-income taxpayers speak English as a second language, or do not speak English at all, LITCs also provide access to services in other languages so that taxpayers can obtain needed representation and education and can understand and exercise their rights under the tax laws. To help ensure low-income and ESL taxpayers have access to representation, education, and advocacy, it is critical that each state, the District of Columbia, and Puerto Rico have LITC coverage.

In a recent report, the Treasury Inspector General for Tax Administration highlighted the work of LITCs, and the assistance they provide in helping ensure eligible individuals receive their economic impact payments during the pandemic. The access ultimately helps ensure these taxpayers obtain fair results and that tax administration is responsive to the needs of all taxpayers, regardless of their income level. To learn more about the LITC Program, visit the program website at https://www.taxpayeradvocate.irs.gov/litc/.

The Taxpayer Advocate Service Advances LITCs’ Extraordinary Advocacy

Throughout the year, the Taxpayer Advocate Service (TAS) provides guidance, assistance, and oversight to LITC grantees and prospective applicants. Through TAS, the IRS has made funding commitments to 129 great LITCs for the 2021 grant year, including 66 with legal services organizations, 41 at academic institutions, 17 that are part of community-based nonprofit organizations, and five sponsored by bar associations or pro bono volunteer-focused organizations. If you share a passion for justice and public service, consider joining the LITC community made up of independent clinics who network and collaborate on representation projects, educational activities, outreach strategies, and advocacy issues impacting groups of taxpayers. In 2019, our LITCs represented 20,259 taxpayers, educated 41,840 taxpayers and service providers, helped secure $6.8 million in refunds, and decreased or corrected $50 million in tax liabilities. For more information about the impact LITCs have on the lives of low-income and ESL taxpayers, including success stories like those I highlighted above, see Publication 5066, Low Income Taxpayer Clinics 2020 Program Report.

Interested applicants are encouraged to watch this video about applying for an LITC grant and review Publication 3319, Low Income Taxpayer Clinics 2021 Grant Application Package and Guidelines, which describes key program guidelines and includes the most recent grant application package. If you or potential applicants have questions or need additional information about the LITC Program or the application process, please contact the LITC Program Office at 202-317-4700 (not a toll-free call) or by email.

NTA Urges Congress to Increase Per-Clinic Yearly Grant Cap

To strengthen the LITC Program, in my 2021 Purple Book, I recommended that Congress amend IRC § 7526(c)(2) to increase the annual per-clinic funding cap to $150,000, and index the limitation to rise with inflation in future years pursuant to the rules prescribed in IRC § 1(f). The current per-clinic cap of $100,000 was set when the LITC Program was created in 1998, and it has never been increased. Total price inflation since 1998 has been approximately 60 percent, which has substantially eroded the value of a $100,000 grant. As a result, many clinics are not receiving as much funding as they could productively spend to help taxpayers.

The LITC Program is effective and efficient. For example, many clinics recruit attorneys and certified public accountants to accept cases on a pro bono basis. By leveraging the volunteer contributions of tax professionals in this way, clinics often provide services worth far more than the dollar value of the grants they receive.

In 2019, over 1,555 volunteers provided nearly 53,000 hours to LITCs. The LITC Program has attracted broad bipartisan support since its inception, and Congress has increased the program’s overall annual funding level by specific appropriation since 1998. For fiscal year 2021, the funding level was set at $13 million — more than double the amount specified in IRC § 7526(c)(1).

Many successful clinics have been funded at the $100,000 cap for years and have seen the purchasing power of their grants decline. There is no doubt that some clinics, such as clinics responsible for large geographic areas or sizeable taxpayer populations, could productively use additional funds. In some instances, clinics have offered to expand their coverage to underserved areas, but to do so, they need additional funds to cover the costs. In our discussions with congressional staff, there has been widespread support for increasing the grant cap and no opposition. But as always, moving legislation through both houses of Congress on a discrete issue is not easy. Thus, I will continue to strongly encourage Members of Congress to sponsor or support legislation to increase the per-clinic annual cap from $100,000 to $150,000, and index it for inflation in future years. In this way, we can further enhance taxpayers’ right to retain representation.

Conclusion

Tamara Borland, the Director of the LITC Program, shares:

I worked for a legal services organization as an attorney for over twenty years, thirteen as the Clinic Director for the LITC. It was some of the most rewarding work I did. I was able to take something that most people are scared of, taxes, and demystify it. I helped people learn that they could work through these issues. Through education events, the LITC was able to provide information about taxes, dispel myths or misinformation, and increase the chances that audience members might avoid tax problems in the future. What I and my fellow clinicians were able to accomplish for clients was so rewarding; houses saved from foreclosure, levies stopped, refunds released, identity thieves stymied, and often the most significant service we provided was to help relieve the heartache and worry that many had carried for so long because they didn’t know what to do or where to turn.

The added benefit to this work is that when I joined the LITC, I joined a community passionate about tax advocacy. There were network groups, informal and formal mentors, and opportunities to consult and collaborate with clinicians across the country all working to increase the effectiveness of our advocacy to improve outcomes for taxpayers.

 

Join the LITC community and help those who can’t always help themselves. Grant applications will be accepted through April 16.

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The views expressed in this blog are solely those of the National Taxpayer Advocate. The National Taxpayer Advocate presents an independent taxpayer perspective that does not necessarily reflect the position of the IRS, the Treasury Department, or the Office of Management and Budget.

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