Guide to Using the Low Income Taxpayer Clinic (LITC)
The IRS has multiple programs and resources available to taxpayers. One of these is the IRS Low Income Taxpayer Clinic (LITC), a program designed to aid qualified organizations in representing low-income taxpayers who have faced issues with the IRS. Understanding this program can help you determine who qualifies for it, as well as where to go for assistance with tax concerns.
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What is the Low Income Taxpayer Clinic?
The Low Income Taxpayer Clinic (LITC) is a federal grant program issued through the IRS that offers up to $100,000 annually to independent organizations that qualify under the requirements and regulations. These organizations can use the funds to provide outreach and education to taxpayers for whom English is a second language, as well as low-income taxpayers who are experiencing tax-related issues with the IRS and need further assistance.
For eligible taxpayers, these services are offered at a low cost or for free. Organizations that provide services receive partial funding, although many of those involved in the process provide their time and knowledge on a volunteer basis. Before agreeing to provide services, those involved with an LITC will need to ensure that taxpayers meet income requirements and guidelines, as well as any other necessary criteria.
Low-Income Taxpayer Clinic vs. Taxpayer Advocate
Another resource offered through the IRS is the Taxpayer Advocate Service (TAS) program, which differs from the LITC program. The TAS program is handled through an independent department within the IRS, ensuring that every taxpayer understands their rights and the IRS treats them fairly. Taxpayer advocates through the program can help taxpayers identify and resolve specific tax-related issues, as well as recommend changes to tax laws or IRS practices that can further aid taxpayers.
TAS offices exist in every state, as well as in Washington, D.C. and Puerto Rico. Unlike the LITC, the income of the individual is not taken into account. These services are generally offered to those taxpayers that have issues resolving their tax problems through the regular channels provided.
The resources and services provided through this program are free to taxpayers. The ultimate goal of those who work for the independent organization that provides these services is to resolve issues taxpayers are facing, as well as improve the tax system in the U.S. for current and future taxpayers.
Who Provides the Services Offered by the LITC?
All of the services offered under the LITC are provided by legal services and legal aid organizations, non-profit organizations that serve low-income individuals across the U.S., and clinical programs operated through accredited accounting, business, and law schools. Those who assist low-income taxpayers through the program are often volunteers. In 2018, more than 1,890 volunteers gave of their time through the program, representing over 17,000 taxpayers.
Organizations that receive IRS grants under this program must match the fund’s dollar for dollar, as well as provide the required services as outlined by the program’s mission. These services include educating taxpayers, representing individuals facing issues with the IRS, and identifying and advocating for issues that affect low-income taxpayers.
Although an LITC does receive partial funding from the IRS, the clinic operates independently of the government agency. As a result, a taxpayer may receive different services depending on which clinic they use and who is assisting them. For a taxpayer to qualify for services under the LITC, they must meet certain criteria for the LITC to accept them into the program
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Who is Eligible to Use These Services?
Low-income taxpayers who need help resolving a tax dispute, appeals, tax collection issues, audits, and appeals are eligible to use these services, as long as they meet the income guidelines. The income ceiling is based on the size of the family and the state of residence. Additionally, those who speak English as a second language and don’t fully understand their responsibilities and rights as taxpayers are eligible for the services.
Types of Services Offered at LITC
Some of the services offered through the LITC include:
- Pro bono representation in tax disputes with the IRS, including federal tax litigation, collections, appeals, and audits.
- Assistance responding to IRS notices and problems with tax accounts.
- Identification of issues that target or impact low-income taxpayers.
- They advocate for low-income taxpayers who cannot afford the cost of a tax professional.
- Education for taxpayers about their rights and responsibilities.
According to the IRS Publication 5066, taxpayers who worked with representatives at organizations through the LITC program were able to resolve their issues in several ways. Below were the most common methods the LITC uses to help taxpayers with their issues based on 2017 percentages:
- 23% Offer in Compromise: This service allows taxpayers to settle taxes that they owe for less. For taxpayers to qualify for this, they must meet the strict qualifications and provide detailed financial statements to the IRS while providing a reasonable settlement amount that is in the benefit of the IRS.
- 14% EITC Examination: The IRS audited many tax returns where the low-income taxpayer claimed the child-related refundable tax credits, such as the EITC. The LITC works with the IRS to substantiate this credit and ensure the taxpayer receives their much-needed refund.
- 10% Installment Agreement: An installment agreement allows the taxpayer to pay back the taxes they owe in monthly installments. There are various types of installment agreements. At times, detailed financials must be provided to obtain a lower monthly payment than generally allowed through the standard installment agreement.
- 9% Tax Court Litigation: All LITCs are required to have a staff member or pro bono panel member who can practice before the U.S. Tax Court. Having a member who can practice before the U.S. Tax Court allows the LITC to file a petition in the Tax Court and present evidence that is required to support the taxpayers claim.
- 8% Levy Release: A levy can lead to serious financial hardship for someone who is low income. Various methods can be used to release a levy. The LITC can analyze the taxpayer’s situation and determine the best course of action to prevent required funds from being seized by the IRS.
- 6% Lien Withdrawal: A lien can impact the taxpayer’s ability to pay back the taxes owed. The LITC can help identify reasons a withdrawal is necessary and file the appropriate documents to help lift the financial burden of a lien on a distressed taxpayer.
- 5% Identity Theft: Identity theft has been on the rise and has impacted taxpayers refunds due to fraud. This type of situation must be reported to the IRS to ensure the IRS processes the proper tax return for the taxpayer that has experienced tax-related identity theft.
- 4% Innocent Spouse Relief: Innocent spouse relief can relieve tax liabilities that were caused by a current or former spouse
- 3% Audit Reconsideration: The LITC can reopen the results of prior audits when the taxpayer has new information to present. For the LITC to do this, the IRS must have assessed more tax owed that is currently unpaid or the IRS disallowed a tax credit.
- 2% Collection Due Process Hearing (CDP): The LITC can help with filing and representing taxpayers with a CDP hearing to protest and IRS collection notice, among other possibilities.
- 16% Other: Other miscellaneous services that were under 2% each of the total work performed by the LITC.
Approximately 10% of those in the program set up installment agreements to pay back the taxes they owed, while 23% of those in the program had offers in compromise accepted by the IRS, allowing them to pay less than they owe and have that amount accepted as payment in full.
Where are the Taxpayer Clinics Located?
Taxpayer clinics under this federally supported program are located in 48 states and Washington, D.C. In 2018, the program awarded more than $11.8 million in grants to 134 organizations located across the U.S. A list of clinics is available through the IRS to help taxpayers locate a clinic near them, while an interactive map is offered through the TAS program’s website. Some of the clinics have more than one location, so if there isn’t one that is very close to you, contact the clinic to find the location closest to you.
How to Apply to Use a Low Income Taxpayer Clinic
Realize that LITCs are independent of the IRS and obtaining representation from them does not mean you will get preferential handling of your case. Each clinic operates on their own, and they will decide if you meet the particular eligibility to use their services.
For general information about the LITC program, you can reach out to the program office at 202-317-4700 or by email at LITCProgramOffice@irs.gov.
To obtain services, you will need to reach out to the LITC in your area and talk with them about your problem and discuss your eligibility to obtain their services.
Alternative Options to Using a Taxpayer Clinic
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Not all taxpayers will qualify for assistance under the LITC program. For those who don’t, additional options and resources are available to resolve tax issues. The IRS has resources, including installment agreements, offers in compromise, and appeal processes, to aid those who owe back taxes. The TAS program may be another option. Additionally, the options provided through BackTaxesHelp.com assist taxpayers as they work to resolve their problems, including tax settlement, payment plan options, and disputes or appeals.
Although facing a tax concern is never a fun experience, the IRS and independent organizations provide options to help resolve these concerns and help taxpayers get back on financial track.