Remember Low Income Taxpayer Clinics and Other Tax Charities on Giving Tuesday

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Procedurally Taxing readers are probably being bombarded by fundraising requests from all sorts of nonprofits today, which somehow has become designated as a global “Giving Tuesday”.   No doubt, in this time of the pandemic and economic stress, there are many worthy causes if one is inclined to give.  In the face of job losses, unemployment, illness, and racial injustice, it would be easy to overlook the important work being done by Low Income Taxpayer Clinics (LITCs) and other tax charities like the Tax Assistance Public Service (TAPS) endowment.  I would just like to encourage PT readers to take a moment out of their day and reflect on the work of the LITCs and consider contributing to (and volunteering with) their local clinic.

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2019 was the 20th anniversary of the federal LITC grant program, which was created by the IRS Restructuring and Reform Act of 1998 (RRA 98) and IRC section 7526.  (Full disclosure: I testified before the House Ways and Means Oversight Committee and the Senate Finance Committee during the RRA 98 hearings about the importance of a grant program for LITCs, and the LITC I founded is a grant recipient.  I also oversaw the LITC grant program from 2004 to 2019, as the National Taxpayer Advocate.  So I am little biased in favor of LITCs!)  It is thrilling to see that twenty of the LITCs that were in the first round of grantees in 1999 are still participating in the federal grant program today.  In grant year 2019, the IRS issued $11.7 million in grants to 131 organizations.

As I discussed in my post last week, part of the mission of the Center for Taxpayer Rights is to promote and support the LITCs.  I briefly covered all the work the clinics have been doing on behalf of vulnerable taxpayers throughout the pandemic. Not only have they successfully litigated access to Economic Impact Payments (EIPs) for millions of taxpayers, but on a day-to-day basis LITCs have been up and running, in virtual environments, helping tens of thousands of taxpayers in tax disputes with the IRS.

A quick look at the 2019 LITC Program Report provides some eye-popping statistics – For grant year 2018 (the most recent grant cycle for which numbers are publicly available):

  • 19,513 taxpayers were represented by LITCs in tax controversies with the IRS;
  • 16,595 taxpayers received consultations or advice from LITCs;
  • 3,199 taxpayers were brought into filing compliance by the LITCs; and
  • 4,261 taxpayers were brought into collection compliance.

If those numbers don’t demonstrate the important role LITCs play in the lives of low income taxpayers, maybe these statistics will drive the point home:

  • Over $4.7 million in refunds were secured by LITCs;
  • Over $123 million in tax liabilities were decreased or corrected by LITC representation; and
  • 8,516 taxpayers facing collection action received relief through LITC representation.

Clinics represent taxpayers in all manner of disputes, including collection due process hearings, offers in compromise, currently not collectible classification, non-filers, earned income tax credit and child tax credit audits and audit reconsiderations, and worker classification.  The 2019 LITC Program Report (page 20) contains many “success stories” which everyone should read, but this one really shows the life-changing impact of LITC representation:

LITC Helps a Veteran and His Wife Find Relief From Debt and Saves Their Home

The taxpayers were a senior couple with no children. The husband had served in the military and was disabled during combat operations. He had a construction business, and together he and his wife invested large amounts of time and money into renovating their home into a bed and breakfast.

After years of financial setbacks, the couple lost their home and long-time business, resulting in a large outstanding federal tax debt. The taxpayers filed for bankruptcy. At that time, they were living on a fixed income of Social Security and a small Veterans Administration pension in a subsidized senior apartment that they were told they could not live in if they had more than $10,000 in tax debt.

The couple came to the LITC after they began receiving certified mail notices from the IRS about the federal tax debt. The clinic called the IRS to place a 60-day hold on collection while the clients gathered documents for an OIC. The couple then received a notice of intent to levy their Social Security benefits, and the clinic requested a CDP hearing, where it helped the couple settle their entire federal tax debt with an OIC for $1.

The taxpayers returned a customer satisfaction survey to the LITC and acknowledged the work of the staff attorney by saying, “Wonderful you have such a smart, kind, and caring man on your staff. Thank you so much for everything.”

128 LITCs participated in the Tax Court’s Clinical Program, whereby the Court includes “stuffer letters” from the LITCs in various notices to pro se petitioners and LITCs and other pro bono programs attend calendar calls and pre-calendar settlement days, as well as enter appearances before the court on behalf of low income taxpayers.  Over 9 percent of all LITC cases in grant year 2018 involved litigation, with the majority in Tax Court.

Now, what can PT readers do?  Well, for one, you can contribute.  Remember that LITC federal grant funding is dependent on LITCs raising a dollar-for-dollar match – either through hard cash or the fair market value of in-kind contributions, including volunteer time.  As I mentioned in last week’s post, many small and rural LITCs have a hard time raising matching funds – so your contributions will literally bring in a dollar for every dollar you contribute.  The Taxpayer Advocate Service website has a map that lists all the LITCs currently funded along with their websites, and Publication 4134 contains LITC grantee names, locations, and telephone contact information. 

If there is a clinic in your vicinity, please consider volunteering for their pro bono panel as well as giving – LITCs need help from all manner of taxpayer professionals – attorneys, CPAs, enrolled agents.  And your volunteer time counts as matching funds – in grant year 2018, over 1,887 volunteers gave 56,971 hours.  If there isn’t a clinic near you, consider giving to a rural or other clinic that has not yet received the full $100,000 annual federal grant.  You can find the list of 2020 grantees and the grant award here.

And please don’t forget the Tax Assistance Public Service (TAPS) Endowment.  PT has long been an advocate for this important program, as witnessed by the link button on PT’s website.  Through the TAPS endowment fund, the American Bar Association Section of Taxation provides stable, long-term funding for its tax-related public service programs. The TAPS endowment fund primarily supports the Christine A. Brunswick Public Service Fellowship program, which provides two-year fellowships for recent law school graduates to work for non-profit organizations offering tax-related legal assistance to underserved communities.

In its four-year existence, the TAPS endowment fund has supported 20 fellows. Not only have the fellows produced impressive results, but many have secured positions in the field of low-income tax assistance and continue to serve low-income communities and train a new generation of law students to provide these services. Other fellows have clerked for judges of the U.S. Tax Court who value their experiences working with underserved taxpayers and their perspectives gained from their first-hand involvement in low-income tax issues. Fellows who practice tax law in other settings such as major law firms and the government, continue to contribute to the Tax Section by remaining active in pro bono initiatives, speaking on panels, leading committees, drafting comments, and mentoring fellows and other new lawyers. This program has been incredibly successful both in serving taxpayers who otherwise might not have representation, making systemic change in local communities and in providing a springboard to careers in low-income tax services. Consider giving to the TAPS endowment fund today by clicking on the button on the PT website.

Of course, Keith, Les and I also would welcome any contributions to the Center for Taxpayer Rights as well – the Center now has its own “donate” button on this blog – but your contribution to any of the these LITCs not only will provide much-needed funds but also will show the hard-working clinicians that their work on behalf of low income taxpayers is deeply appreciated by the entire tax community.

So.  On this Giving Tuesday, or really any other day, those of us in the tax profession have a broad array of opportunities for giving in the tax field.  We, more than anyone else, know the difference representation can make in the lives of taxpayers.  Please take a moment out of your day to look at the website of your local LITC and consider giving.  Even the smallest donation can help with an IRS match and other expenses.  And, on behalf of Procedurally Taxing, thank you!

Comments

  1. My problem: how do I tone down my anger enough so it doesn’t make my comment distasteful. I have been fighting with the IRS and cannot seem to get help I need. That includes paying for it, or asking non-profit tax clinics for it, and even submitting IRS forms for it. All to no avail! My experience is dealing with people who, instead of trying to find any way to help, use more effort to avoid having to help. Ridiculous! So, when I read about even legitimate requests for donations, I rail!
    The rich can afford it, the poor get it for free. The rest of us suffer alone!
    (Did I use too many exclamation points ?) Too bad!!!!!!!

    • Scott Davies says

      Richard, I think a lot of taxpayers would agree that it can be difficult to resolve a tax controversy on your own. That’s why tax clinics provide representation to low income individuals who cannot afford to pay for help. If your tax controversy hasn’t been resolved, a local clinic may offer at least a consultation to help you. Also, some clinics are able to accept cases that other clinics cannot for more reasons than I can fit into an internet post. IRS Publication 4134 lists all of the clinics. You can easily find the list using Google.

  2. Bob Kamman says

    And since this is a tax blog, let’s remember what’s new for taxpayers taking the sttandard deduction —

    Under the CARES Act, part of the federal government’s pandemic relief program that passed in March, individual taxpayers can take a deduction of up to $300 for cash donations made in 2020 when they file their tax return in the spring.

    https://www.nytimes.com/2020/11/20/your-money/charity-deductions-taxes-coronavirus.html?surface=home-living-vi&fellback=false&req_id=14238879&algo=identity&imp_id=842859208&action=click&module=Smarter%20Living&pgtype=Homepage

    Yes, it’s another marriage penalty. $300 per individual, and $300 per joint return.

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