LITC PROGRAM
INFORMATION
APPLICATION GUIDELINES
TRAINING OVERVIEW
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Training Overview
Objectives
LITC Mission Statement
Grant Year 2016 Changes
LITC Program Overview
Qualifications for Funding
Standards of Operation – General
Standards of Operation – Taxpayer Services
Compliance Requirements
Questions
OBJECTIVES
At the end of this training, ranking panel members will
be able to:
• Explain the mission and history of the Low Income
Taxpayer Clinic (LITC) Program.
• Name the key changes to the application process
and clinic operations for the 2016 grant year.
• Discuss the qualifications for funding a clinic,
including basic eligibility requirements.
• Identify standards expected for operating a clinic.
• Explain how LITCs represent, educate, and
advocate for low income taxpayers and taxpayers
who speak English as a Second Language (ESL).
LITC MISSION STATEMENT
Low Income Taxpayer Clinics (LITCs) ensure the fairness
and integrity of the tax system by providing pro bono
representation to taxpayers in tax disputes with the IRS,
educating low income taxpayers about their rights and
responsibilities, conducting outreach and education to
taxpayers who speak English as a second language
(ESL), and identifying and advocating for issues that
impact low income taxpayers.
GRANT YEAR 2016 CHANGES
Key change for the 2016 grant year:
• LITCs are now required to provide controversy and
ESL services under a single grant award.
TAS’s 2016 Program Goal Focus is
for all states, including DC and PR,
to be served by at least one clinic.
LITC PROGRAM OVERVIEW
LITC PROGRAM OFFICE
• TAS’s LITC Program is a GRANT PROGRAM that
provides matching grants of up to $100K per year to
organizations that operate a low income taxpayer
clinic.
• The LITC Program Office is lead by a Director who
reports directly to the National Taxpayer Advocate.
Nina Olsen,
National
Taxpayer
Advocate
(NTA)
LITC PROGRAM OFFICE ORG CHART
IRC § 7526
• Authorizes IRS to make grants to provide matching
funds for the development, expansion, or
continuation of qualified LITCs.
• LITCs may include clinical programs at academic
institution, and legal aid and non-profit
organizations.
• Qualified clinics may be awarded
grants of up to $100,000/year .
• IRS may award multi-year grants of up
to 3 years.
• LITCs must provide matching funds on
a dollar-for-dollar basis, and may
include salaries and clinic equipment.
LITC HISTORY
• Congress authorized funding for the LITC grant
program as part of RRA98 to provide access to
representation to low income taxpayers.
• The IRS created the LITC Program Office in 1999 to
provide guidance, assistance, and oversight to LITC
grantees and prospective applicants.
• The IRS (W&I) transferred the LITC Program Office to
the Taxpayer Advocate Service (TAS) in 2003.
• The LITC Director reports
directly to the National
Taxpayer Advocate.
QUALIFIED LITCS
(PER IRC § 7526)
• Must not charge more than a nominal fee for
services.
• Must represent low income* taxpayers in
controversies with the IRS.
• Must operate programs to inform individuals for
whom English is a second language (ESL) about
their rights and responsibilities.
Low Income Taxpayer is determined by Federal
Poverty Guidelines, and is an individual whose
income does not exceed 250 percent of the poverty
level, as determined in accordance with official
guidance published by the Federal government.
2015 GRANT AWARDS
• 1999: IRS awarded approx. $1M to 34 clinics
vs.
• 2015: TAS awarded $10.25M, to 132 clinics.
Each clinic receives no more than $100,000.
2015 Clinic Types:
41 Academic
institutions
68 Legal Aid or
Legal Services orgs.
23 Non-profit
or other orgs.
QUALIFICATIONS FOR
FUNDING
QUALIFICATIONS FOR FUNDING
Several qualifications for clinic funding are outlined in
Publication 3319, LITC Grant Application Package
and Guidelines:
• Basic Eligibility Requirements
• Matching Funds
• Grant Period
• Start-Up Expenses
• Fees
BASIC ELIGIBILITY REQUIREMENTS
• LITCs must represent
low income taxpayers in
controversies with the IRS
AND educate ESL taxpayers
about their taxpayer rights
and
responsibilities.
• At least 90% of the taxpayers
represented must have incomes that do not
exceed 250% of the federal poverty level
(90/250 rule).
• The amount in controversy for any taxable year
generally must not exceed the amount specified
in IRC §7463 (currently $50,000).
BASIC ELIGIBILITY REQUIREMENTS
•LITCs may provide LITC services within
a broader spectrum of activity, but
must use LITC grant funds for the
purpose intended.
• LITCs must not make a sub-grant of LITC grant
funds to any other organization!
MATCHING FUNDS
All grantees must provide matching funds on a
dollar-for-dollar basis for all LITC grant funds received.
Only funds that are used
in direct support
of the LITC Program
qualify as matching funds.
2 CFR Part 200.306
Cost Sharing or Matching
GRANT PERIOD
• Applicants that have never before received an LITC
grant are eligible to receive only a single-year grant
award.
• Experienced grantees may be awarded a multiyear grant, not to exceed three years.
• Must submit a Non-Competitive Continuation
(NCC) Request in the 2nd and 3rd year of the grant
period to continue to receive funding.
• The funding amount will be reviewed
annually and may increase or
decrease.
START-UP EXPENSES AND FEES
Grant funds CAN be used for start-up expenses.
Clinics MUST NOT charge more than a nominal fee for
services.
STANDARDS OF OPERATION
GENERAL
STANDARDS OF OPERATION
GENERAL
The LITC Program Office has developed baseline
standards of operation for LITC grantees to ensure all
provide consistent and quality service to low income
and ESL taxpayers. General standards include:
• Staffing
• Volunteers
• Infrastructure and Resources
• Outreach and Community Partnerships
• Networking and Mentoring
• Confidentiality
• Recordkeeping and File Management
REQUIRED STAFFING
Qualified Tax Expert (QTE)
Staff member with sufficient tax law expertise to oversee
technical substantive and procedural tax matters.
MUST BE an attorney, CPA, or enrolled agent authorized
to practice before the IRS and represent low income
taxpayers in disputes with the IRS.
Qualified Business Administrator (QBA)
Staff member with sufficient business administration
expertise to oversee the clinic’s business operations.
Must demonstrate education or experience with
business or program administration.
REQUIRED STAFFING
Clinic Director
Staff member who has overall management responsibility
for the clinic. May also be the QTE or QBA, if qualified.
Manages day-to-day operations, prepares or reviews
and signs clinic reports. Primary contact for both the LITC
Program Office and the LTA’s office.
*Note: QTE and Clinic Director are often the
same person.
NON-REQUIRED STAFFING
In evaluating an applicant, consider:
• Who will be staffing the LITC?
• What are their credentials?
• How much of the personnel budget is devoted to
individuals who are providing direct services to
taxpayers?
VOLUNTEERS
Pro Bono Panel
• Group of qualified representatives who agreed to
provide free representation or advice to taxpayers.
• Panels are encouraged - expands clinic coverage.
• Examples:
• Panel of qualified representatives maintained
by the clinic to whom the clinic refers matters.
• Panel of qualified representatives maintained by
a state or local bar association or society of
accountants to whom the clinic may refer
taxpayers for assistance.
VOLUNTEERS
Quality Assurance Process
• Written position descriptions.
• Process to determine qualifications, e.g.,
licensing and training.
• Procedures and monitoring system to ensure
referrals handled expeditiously and free services.
• Cases can only be referred to other pro bono
organizations, even if the taxpayer does not
meet LITC eligibility requirements.
• Prohibitions in place for LITC staff or volunteers
providing services outside of clinic operations for
LITC clients or individuals who attend LITC events.
INFRASTRUCTURE AND RESOURCES
• Must have one staff member authorized to
represent taxpayers before IRS and a staff member
or pro bono panel member admitted to practice
before the U.S. Tax court.
• Must maintain a bona fide physical place of
business and a permanent address.
• Encouraged to provide a toll-free number.
• Must provide training to staff, volunteers, and others
to effectively represent, educate, and advocate.
• Convenient access to an adequate tax library and
research materials.
• Clinic Director and QTE must attend annual LITC
Conference.
OUTREACH AND COMMUNITY
PARTNERSHIPS
Outreach and community partnerships are integral
parts of LITC grantee program plans. These activities
ensure low income taxpayers are reached and in the
most effective and efficient way possible.
• Focused Outreach: LITCs must develop outreach
plans – in advance of the service period - to
effectively publicize the clinic and its services. Who
is the audience intended? How will the clinic reach
it’s target audience?
• Publicity materials: Materials should be appropriate
for the target audience (language, format).
OUTREACH AND COMMUNITY
PARTNERSHIPS
• Community partnerships: LITCs should develop and
maintain relationships with other community-based
organizations that serve low income and ESL
individuals.
• Successful outreach strategies: A process that
tracks how taxpayers learn about the program and
services offered should be implemented.
• Technical Assistance Consultations: A discussion
with a tax practitioner or other service provider to
give brief advice about a tax issue.
NETWORKING AND MENTORING
• LITCs are encouraged to network
with other clinics.
• Tax issues that affect low
income and ESL taxpayers
• Case strategies
• Education and outreach ideas
• Training on federal tax practice and procedure
• Best practices
• Mentors and other sources of technical assistance
should be available for clinic staff and volunteers.
CONFIDENTIALITY
• Tax professionals have an ETHICAL requirement to
maintain client confidentiality.
• LITC representatives generally must not disclose
information relating to the representation of a client
UNLESS the client gives informed consent.
• LITCs must have safeguards to protect
against inadvertent or unauthorized
disclosure.
• Client information must be removed
from all training materials prior to use.
• With all media requests, clinic staff must act, FIRST
and FOREMOST, in the best interest of the CLIENT.
RECORDKEEPING AND
FILE MANAGEMENT
LITCs must maintain adequate financial and client records.
LITC Required Records
• Grant Expenditure Records – must have written procedures for
approving expenditures.
• Client Records – should be sufficiently detailed.
• Support an award for attorney’s fees, and show all time spent by
staff (including volunteers and students), what work was
performed, amount of time spent, etc.
Security
• Client records must ALWAYS be kept in a secure location
(locked file cabinet or password protected electronic files)
STANDARDS OF OPERATION
TAXPAYER SERVICES
STANDARDS OF OPERATION
TAXPAYER SERVICES
The LITC Program Office has developed baseline
standards of operation for LITC grantees to ensure all
provide consistent and quality service to low income
and ESL taxpayers. Taxpayer services standards
include:
• Representation
• Education
• Advocacy
• Tax Return Preparation
REPRESENTATION
LITCs represent low income taxpayers in controversies
with the IRS. Representation may take place at any
stage of the controversy, which may involve:
• Account adjustments
• Exam
• Collection
• Appeals or Litigation
Financial eligibility must be determined
in a manner that promotes the
development of trust between the
qualified representative and client.
90/250 RULE AND
AMOUNT IN CONTROVERSY
• Clinics must maintain records of the total number of
taxpayers represented or referred in controversies
and the number of taxpayers that have income
below the 250% threshold.
• Satisfaction of the 90/250 Rule is based on income
of family units, not on the average income of those
represented.
• The amount in controversy should generally not
exceed the amount specified in IRC § 7463.
• If a clinic decides to represent a taxpayer in a case
over the amount specified, the clinic must disclose
the number of such cases and provide an
explanation of why each case was accepted.
TYPICAL TYPES OF CASE WORK
PERFORMED
• Office and Field examsSchedule C and E
income and expenses
• AUR notices
• ASFR notices - non-filers
• Audit Reconsideration
• Correspondence
exams - EITC and family
status issues
• Injured Spouse Relief
• Innocent Spouse Relief
• CDP hearings
• Offers In Compromise
(OICs)
• ID Theft
• Worker Classification
• Penalty Abatements
• TFRP Appeals
• Tax Court Cases
• Refund Suits
• Bankruptcy Tax
Discharges
PARTICIPATION IN THE U.S. TAX
COURT CLINICAL PROGRAM
• All LITCs are strongly encouraged to participate in
the United States Tax Court Clinical Program.
• LITCs provide important advice and assistance to
many otherwise unrepresented taxpayers who have
disputes with the IRS.
• Students may practice before the IRS if the LITC
obtains a special appearance authorization (issued
by the LITC Program Office), and the student must
be supervised.
www.ustaxcourt.gov/clinics.htm
EDUCATION
• All clinics are REQUIRED to offer tax education to
low income and ESL taxpayers.
• Educational activities must address taxpayer
rights and responsibilities and other issues of
significance.
• Materials should be in languages appropriate for
the audience.
• Face to face contact is recommended.
• Offering presentations that award Continuing
Professional Education (CPE) or Continuing Legal
Education (CLE) credits can be a valuable tool for
recruiting quality volunteers.
EDUCATIONAL TOPICS
• Tax recordkeeping
• Filing requirements and due dates
• Eligibility for various deductions and credits, e.g., the
Earned Income Tax Credit (EITC)
• Affordable Care Act provisions
• Worker classification
• Identity theft
• Innocent spouse relief
• Audit and appeals process
• Collection alternatives
ADVOCACY
• The LITC Mission includes
identifying and advocating
for resolution of issues
impacting low income
taxpayers.
• Advocacy can be achieved by a variety of
methods, such as:
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Advocacy projects with professional organizations
Comments on proposed IRS regulations
Media (TV, radio, print, public service announcements)
Systemic Advocacy Management System (SAMS)
TAX RETURN PREPARATION
• LITCs may ONLY prepare tax returns or claims for
refund, or assist with ITIN applications in the following
instances:
• As they DIRECTLY relate to resolving a controversy.
• As an ancillary part of ESL education.
Ancillary = Incidental
• LITCs may NOT:
• Charge a fee for tax preparation.
• Include tax return or ITIN application preparation
among a list of services provided in any advertising
material.
COMPLIANCE
REQUIREMENTS
COMPLIANCE REQUIREMENTS
LITC employees are prohibited from engaging in any
lobbying activities during the portion of time that their
salaries are paid from federal grant funds or matching
funds.
• Direct - includes contacting an official or staff member to
influence the legislator to take a position or action on a
specific piece of legislation or potential legislation.
• Grassroots - includes activities that encourage third parties,
to contact federal, state, or local
government officials in support of or in
opposition to a legislative policy or
appropriations matter.
COMPLIANCE REQUIREMENTS
• Civil Rights Compliance
• All applicants of federal funding must provide
information necessary to comply with all
applicable civil rights laws.
• Tax Compliance
• All applicants must be in full
compliance with their federal tax
responsibilities when applying for
an LITC grant and during the grant
year.
QUESTIONS?
CONGRATULATIONS!
You have completed this portion of your ranking panel training!