How Low Income Taxpayers deal with IRS controversies and what it means in the COVID-19 Era

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Today we welcome first time guest blogger Gina Ahn. Gina practiced law as In House Counsel and Program Officer for a private operating foundation working internationally before transitioning to low-income tax controversy in 2019 as the managing attorney of the Koreatown Youth and Community Center LITC. In today’s post, she uses a current case to illuminate some of the unique challenges that many low-income taxpayers face in dealing with the IRS, and how the coronavirus shutdowns particularly impact those taxpayers. Christine

Have you ever taken a subway in a foreign country where you don’t speak the language? You plan; you know when you need to get off; you figure out exact change in advance – yet you still get stuck behind a whole group of people blocking your way off. Panic. You don’t know how to say “Please, let me through. I need to get off.” That feeling of helplessness and desperation is the norm for most of the clients I work with at the KYCC Low Income Taxpayer Clinic (“LITC”) in Los Angeles. Navigating the IRS Automated Underreporter (“AUR”) program, responding to the Integrity and Verification Operations (“IVO”) ID verification requests, and working through the Collections Process is difficult. The Taxpayer Advocate Service’s (“TAS”) Roadmap (Publication 5341, Rev. 9/2019) is a helpful guide to understand where one is in the giant IRS machinery. According to TAS’s map, our clinic’s clients are primarily in the Exam (Orange), Collection (Red), Appeal (Purple), and Litigation (Blue) stations.


Most LITC clients come to us after their deadlines have expired – whether it’s 30, 60, or 90 days after key dates. For these clients, to be perfectly frank, the COVID-19-related reductions in IRS service capacity may not impact them much, if there is no urgent need for action on their case. Someone with a shelved collection case who is seeking an OIC will have the same end result whether we can accomplish it now or 6 months later.

Ironically, it is the taxpayers who are ‘mid stream’ and the most engaged in the IRS controversy process that are the most stressed by COVID-19. As of 3/22/2020, 8 state governors have announced “stay in place” orders of some type. The stress and impact are most easily demonstrated by sharing a real case scenario in the context of a local shut down. KYCC’s LITC is located in the city of Los Angeles. The mayor of Los Angeles issued a stay at home executive order on March 19, 2020, Thursday evening that ordered all non-essential businesses to cease operations. We had 24 hours to implement this order. Since assisting people with IRS controversies is not considered an essential business; we scrambled to prepare for the shut-down.

Like any other service industry operation that works with the general public, we had to shut down. So what’s unique to a low income tax controversy shut down? From my perspective, I believe the loss of in-person face to face appointments impacts the lower income demographic disproportionately compared to a regular tax controversy law firm. The demographic we serve are the least well equipped to access technological “work arounds” and the most likely to respond to “user friction” by dropping out and disengaging from the process of resolving their tax controversy.

This is best demonstrated by example.

LITC Case: EIC, CTC, HoH Correspondence Audit Denied

The last Friday (3/20/2020) I was physically at the clinic, we received a letter from the Service’s AUR program denying the Earned Income Tax Credit (“EIC”), Child Tax Credit (“CTC”), and Head of Household (“HoH”) filing status for a taxpayer we are representing. Fortunately, since this client is a native English speaker, I did not need to translate it into a foreign language. Of course, as any subject matter expert has to do in any industry, I still need to act as a cultural broker from “IRS speak” into “what it means for you.”

Prior to COVID-19, this taxpayer already had an uncooperative landlord not willing to find their cash receipt book to supply the additional receipts need to prove that that the taxpayer supported her dependents in tax year 2018.  Now, because of stay in place orders, that same landlord is even less available. Proving support of my client’s dependents will be challenging.

Fortunately, seeking redetermination in Tax Court is still an option. But, this taxpayer is already exhausted and wary of engaging in the government system. “Why,” you ask? To be honest, I do not quite know the answer. I just know she is psychologically fragile. Even at our first meeting where we discussed a response to the audit (back in November 2019), I asked her to obtain receipts from the landlord, it took her about 6 weeks to respond with about six receipts. She was fairly email savvy, so I emailed a request for more receipts. I get no response for two weeks. So, I called her cell.

“I’m sorry, but it would be best to prove more than 6 months, you know, like a “majority” of support. Can you get the rest of the receipts for 2018?”

She sighed and replied, “Maybe I should just give up.”

“Why? I mean, they are your kids and you took care of them. You should get the credit.”

“Well Gina, I saw your email and asked my landlord for more receipts. But he’s unwilling to look up last year’s receipt book. He won’t respond to any of my requests. And I have to work and take care of my kids and there are so many other things I need to do besides this.”

I negotiate with her, “Okay. Instead of giving up, just let me fax everything else we have with the six receipts from him and see how they respond.”

Do you hear her exhaustion? This working single mom of two children is just plain exhausted by life. She works an hourly job, and fighting to obtain proof to show she’s raising her kids is like the proverbial last straw that broke the camel’s back.

In this context, my client receives an IRS response on March 20, 2020 – the day after the mayor of Los Angeles announces stay at home orders. The IRS response essentially tells her, “Nope, we don’t agree. You owe us $5500 + penalties + interest = $7000. You can ask us to reconsider. Or you can go to court. But don’t be late – you’ve got a hard deadline of June 1, 2020.”  Since she doesn’t have the benefit of my colloquial translation (yet), she will likely focus in on the only part of the letter not in legalese, “How to Pay Your Taxes” which includes the final dollar figure.

If she has lost her job; she’s already stressed about how to make ends meet. If she’s fortunate enough to have a job that permits telework; she now has to figure out how to work from home while the kids are at home. Unfortunately, school will likely stay closed until the summer (adding another obstacle to her proving her kids’ residence) and the uncooperative landlord is even less accessible.  And a request for medical records from the doctor’s offices (often used to prove residence) are not going to be top of mind during a pandemic crisis.

Fortunately, my client has 90 days (by June 1, 2020) to petition the Tax Court. Have you ever tried explaining to a client how Tax Court is not Judge Judy and it’s not like the TV show Suits either? Helping her comprehend the reality of what Tax Court involves, how testimony works, and why interacting with appeals officers, IRS counsel, and a judge won’t necessarily be a futile repeat of her prior experience with correspondence examiners is not a conversation that works very well over the phone. The already overwhelming EIC audit has psychologically “beaten” the taxpayer down and taking her case to another level requires an element of “hand holding” with a compassionate explanation.

So you may wonder, “What do ‘hand holding compassionate explanations’ have to do with the implications of COVID-19 on low income taxpayers? Is it any different from how the pandemic impacts middle income America?” This EITC audit is my long-winded anecdotal way to explain a one word answer:  time. This group of taxpayers requires more reminders, phone calls, and face to face in person time than any other demographic I’ve ever worked with. In the past, I’ve worked with developing country NGO grantees, churches, refugees, and private operating foundation directors. All of whom may not have been technologically sophisticated. The low income taxpayer comes with the most ‘defeatist’ perspective that requires time to overcome. Technology is not the panacea that solves all problems. Individuals need a motive and reason to engage with the system. No video conferencing software can give the handshake, acknowledgement, and personal explanation needed.

I’ve had clients who could have snail mailed, faxed, or emailed a single page of a missing tax return to me to respond to an audit, but instead they would ask me if they could bring it into our office. When I first started this job, I was flabbergasted by the request. I would answer, “Of course, but if I happen to be away from my desk or in the middle of an appointment, feel free to leave it with my assistant or in my mailbox.” Often, they would patiently sit there and wait until I finished my call, or sometimes, they’d even wait for me to come back from lunch (!!). Now, I am no longer surprised at the request. I’ve come to realize that for a certain segment of my clientele, the direct handshake, eye contact, and acknowledgment, “I’ve received this document. I have seen you. I will be responsible for your case” – offers a reassurance that is the closest they will ever come to a human being explaining and working with them through the behemoth of the IRS machinery.

I used to disdain this part of my job as horribly inefficient (the billable hour culture of law influence). But now, I see it with more grace. Working through the IRS controversy process can help taxpayers begin to have more faith in the system. In turn, those taxpayers begin to make good faith attempts to re-engage in the system. A system that has, until now (for efficiency’s sake), treated them as a widget in the awe-inspiring revenue machinery of the United States government.

The process of humanizing the machinery of the complex IRS system requires time. So, how does “time” translate into practical IRS procedures and practice? I am sure my LITC colleagues and the ABA Tax Section Pro Bono & Tax Clinics listserv will think of many more practical and substantive tax provisions that would be helpful. But, as a new tax practitioner, I tend to think “functionally” rather than technically – since I am not as familiar with the Code or IRM sections that would have to be considered. Below is a list of practical “functional” needs I can think of that would be practical for my clients.

  • extend timelines to pay estimated quarterly taxes and monthly installment agreement amounts
  • create a streamlined process to reduce existing installment agreement payments
  • extend VITA (Volunteer Income Tax Assistance) to 7/15/2020
  • extend timelines to respond to notices, including audits and identity verification
  • extend timelines to renew ITINs (or permit the use of ITINs that expired in ty 2019/2020)
  • expand Certifying Acceptance Agents (for ITINs) into VITA programs
  • create a streamlined process for change of address updates (or deputize currently closed VITA volunteers to input address changes with existing ID from prior year returns)
  • lessen documentation (permit verbal?) requirement to qualify for CNC
  • broaden the definition of “experiencing imminent hardship” for TAS

Note: after this post was drafted, the IRS announced its “People First Initiative” in IR-2020-59 dated March 25, 2020, which provides significant relief including some of the items above.


  1. One of the big questions for me here is WHY did this taxpayer get audited? AUR suggests that there was some discrepancy between the income reported on the return and the what was reported to the IRS on information returns, so there is some explanation. But there are many taxpayers who get examined not as a result of an AUR issue but something else… and the IRS doesn’t say why the taxpayer is being examined… maybe it is some algorithm that calculated probability… but that is terribly unfair, I think, for the IRS to audit you if they don’t have an actual concrete reason specific to you… this seems to happen very frequently to low income taxpayers… I wish there was a rule that the IRS had to state explicitly and understandably in each audit/exam notice the precise reason why the taxpayer is being audited… the AUR notices are one of the few notices, I think, that sort of do that…

  2. Kenneth H. Ryesky says

    Thinking dirty: Why is the landlord is evasive about his/her records? Perhaps the threat, express or implied, of a possible IRS encounter might prove persuasive enough to induce the landlord to cooperate.

  3. Steve Milgrom says

    Excellent description of what it’s like to work with LITC clients. Giving them support is job one. Having a professional on their side who will help them navigate the system and assure them not of a specific outcome, but that you are watching out for them, is the most important part of the service we provide.

  4. While the “People First Initiative” sounds very nice, on paper, it’s too bad that there is a substantial portion of the front line IRS employees, who don’t view things, in the same manner, as their superiors. The “Taxpayer Bill of Rights” affords taxpayers clearly stated rights, in dealing with the IRS and the IRS Mission Statement, specifically, states that the IRS is to “provide…taxpayers top-quality service”; however, many staff either don’t know, don’t understand or don’t care about those rights or the Mission.

  5. Great post and thank you for it.

    I spent my “paid career” as a tax advisor to Fortune 100 companies. I now provide pro-bono tax and immigration services to low-income families, in particular refugees and asylees. What you describe is not unique to a new attorney. It’s a different world in the trenches of the low-income community. For example, earlier this week, I “gave up” on a client. He wore me down, and I let him concede the adjustments. He just couldn’t get himself to prove that, yes, he earned the income (multiple, part-time jobs with noncompliant employers), yes, his two sons lived with him (complicated marital situation) and, yes, he managed to support two nieces on his meager income (because that’s you do in his community). Add to that he survived a brutal civil war, speaks little English and recently lost his main job. It’s frustrating, but I need to see it from his perspective. Still, I am more convinced than ever that our tax system is absurd. Instead of an endless stream of notices, couldn’t the IRS get off its ass, send an inspector to his home and have a conversation? I know that it does not work that way. It wouldn’t take long to verify the facts if it did.

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