The Inner Income Service is pointing to a few of the successes with professional bono clinics that represented almost 20,000 taxpayers in 2020 who confronted a tax dispute with the company, regardless of the pandemic.
The annual report on the Low Earnings Taxpayer Clinic program, launched Wednesday by the IRS, spotlighted how this system has been helping individuals who have been combating financial challenges in the course of the pandemic in addition to with their tax money owed. The report discusses how LITCs provide illustration, training and advocacy for particular person taxpayers who’re low-income or communicate English as a second language (ESL).
The report arrives at a time when taxpayers of each earnings degree are struggling to do their taxes amid modifications within the tax legal guidelines via the varied pandemic aid packages of latest years just like the CARES Act and the American Rescue Plan Act. The IRS’s chronically underfunded company has been particularly short-staffed and has tried to deal with a backlog of tens of millions of unprocessed tax returns and amended tax returns from final 12 months, with little availability to reply cellphone calls or reply to correspondence from taxpayers anxious in regards to the tax assortment notices they’re receiving. Beneath stress from lawmakers and tax professionals, the IRS introduced Wednesday that it could be suspending lots of the automated notices that its laptop programs have been sending to taxpayers about collections, balances due and unfiled tax returns (see story).
The LITC Program is a federal grant program administered by the Taxpayer Advocate Service, led by Nationwide Taxpayer Advocate Erin Collins, who had additionally referred to as on the IRS to cease the automated notices throughout a congressional listening to Tuesday (see story). LITCs signify people whose incomes usually fall at or beneath 250% of the federal poverty guideline and who’re attempting to resolve their tax issues with the IRS, together with audits, appeals and tax assortment disputes. LITCs can signify taxpayers in court docket in addition to earlier than the IRS. In addition they can provide taxpayers details about their rights and obligations in numerous languages for ESL taxpayers. LITCs provide providers without cost or a small price. They obtain IRS grants however work independently to assist and advocate on behalf of taxpayers.
The clinics struggled in the course of the pandemic, however nonetheless managed to assist almost 20,000 taxpayers in 2020. “In March 2020, shutdown orders went into impact throughout the US, requiring clinics to alter how and the place they operated,” Collins wrote within the report. “The IRS despatched employees dwelling, inflicting a lot of the IRS to close down and making decision of taxpayer circumstances much more troublesome. Compounding the challenges, Congress handed the Coronavirus Support, Aid, and Financial Safety (CARES) Act, giving the IRS the accountability to ship greater than 160 million financial impression funds (EIPs). LITCs out of the blue wanted to be consultants within the new regulation and to resolve the conflicts that arose when taxpayers didn’t obtain the advantages to which they have been entitled. LITCs continued to offer fine quality illustration and training providers to taxpayers regardless of these circumstances.”
Throughout 2020, LITCs helped taxpayers get greater than $5.eight million in tax refunds and diminished or corrected taxpayers’ liabilities by over $116 million. In addition they introduced greater than 2,900 taxpayers again into cost compliance.
Via outreach and training actions, LITCs tried to make sure people understood their rights as U.S. taxpayers by conducting greater than 1,000 instructional actions that have been attended by almost 134,000 people. Roughly 1,500 volunteers contributed to the success of LITCs by volunteering greater than 42,000 hours of their time. Almost 65% of the volunteers have been attorneys, licensed public accountants or enrolled brokers.
LITCs used completely different approaches to advocate for taxpayers, together with assortment options to resolve points administratively inside the IRS, litigating circumstances within the U.S. Tax Courtroom and different federal courts, and elevating systemic points via the Taxpayer Advocate Service’s Systemic Advocacy Administration System.
The report cites an instance of how an LITC helped a taxpayer in want. A low-income taxpayer who was working in a neighborhood grocery retailer incomes minimal wage was the only breadwinner for her household of 4 however had by no means filed a federal earnings tax return. The IRS despatched her Statutory Notices of Deficiency for 4 tax years, informing she owed a number of 1000’s of {dollars} primarily based on unreported earnings. Unsure what she might do to handle the difficulty, she requested for assist from an LITC. The clinic evaluated the case and defined that she wanted to contest the notices within the U.S. Tax Courtroom. The LITC helped her file a Tax Courtroom petition and argued that the taxpayer didn’t owe tax however as a substitute was due refunds, as she was eligible for the Earned Earnings Tax Credit score and Baby Tax Credit score. She finally acquired over $16,000 in tax refunds.