Wednesday, February 9, 2022

IR-2022-30: Low Income Taxpayer Clinics represented nearly 20,000 taxpayers dealing with an IRS tax controversy

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IRS Newswire February 9, 2022

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Issue Number:    IR-2022-30

Inside This Issue


Low Income Taxpayer Clinics represented nearly 20,000 taxpayers dealing with an IRS tax controversy

WASHINGTON — The Internal Revenue Service's Low Income Taxpayer Clinic (LITC) Program office today announced highlights from its 2021 annual report. The report describes how LITCs provide representation, education and advocacy for individual taxpayers who are low-income or speak English as a second language (ESL).

The LITC Program is a federal grant program administered by the Taxpayer Advocate Service, led by National Taxpayer Advocate Erin M. Collins. LITCs represent individuals whose incomes are generally at or below 250% of the federal poverty guideline and who are seeking to resolve tax problems with the IRS, such as audits, appeals and tax collection disputes. LITCs can represent taxpayers in court as well as before the IRS. They also can provide information about taxpayer rights and responsibilities in different languages for ESL taxpayers. LITCs provide services for free or a small fee. They receive IRS grants but work independently to assist and advocate for taxpayers.

Thousands of taxpayers assisted
During 2020, LITCs represented nearly 20,000 taxpayers dealing with an IRS tax controversy and provided consultations or advice to another 18,000 taxpayers. They helped taxpayers secure more than $5.8 million in tax refunds and reduced or corrected taxpayers' liabilities by over $116 million. They also brought more than 2,900 taxpayers back into payment compliance.

Through outreach and education activities, LITCs strived to ensure individuals understood their rights as U.S. taxpayers by conducting more than 1,000 educational activities that were attended by nearly 134,000 individuals. Some 1,500 volunteers contributed to the success of LITCs by volunteering over 42,000 hours of their time. Nearly 65% of the volunteers were attorneys, certified public accountants or enrolled agents.

LITCs used a variety of approaches to successfully advocate for taxpayers. These included utilizing collection alternatives to resolve issues administratively within the IRS, litigating cases in the United States Tax Court and other federal courts, and elevating systemic issues through the Taxpayer Advocate Service's Systemic Advocacy Management System.

One success story among many
Here is one example of how an LITC assisted a taxpayer in need: A low-income taxpayer was working in a local grocery store making minimum wage. She was the sole breadwinner for her family of four and had never filed a federal income tax return.

The IRS sent her Statutory Notices of Deficiency for four tax years, asserting that she owed several thousands of dollars based on unreported income. Unsure what she could do to resolve the issue, the taxpayer sought help from an LITC.

The LITC evaluated the case and explained that she needed to contest the notices in the U.S. Tax Court. The LITC helped her file a Tax Court petition and argued that the taxpayer did not owe tax but instead was due refunds, as she was eligible for the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC).

The LITC's advocacy on the taxpayer's behalf was a success. She ultimately received over $16,000 in refunds, providing the taxpayer with a valuable financial lifeline. In addition to helping the taxpayer resolve her tax issue, the LITC educated her about tax administration and the tax law, including how to have future tax returns prepared and filed for free at a local Volunteer Income Tax Assistance site, and the availability of anti-poverty tax benefits such as the EITC and the CTC.

The full report contains extensive details about the LITC Program and more stories about the extraordinary results that LITCs achieved on behalf of their clients.

How to Become an LITC
Through the LITC Program, the IRS awards matching grants of up to $100,000 per year to qualifying organizations. If anyone is interested in learning more about the LITC Grant Program, they should contact Karen Tober at Karen.Tober@irs.gov or review Publication 3319, Grant Application and Guidelines.

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