Monday, March 9, 2015

Tax Law: Help Low-Income Clients Resolve Problems with the IRS

By Nancey G. Penner

Bay Area Legal Services has operated a Low Income Taxpayer Clinic (LITC) since 2002 with funding provided by the Taxpayer Advocate Service of the Internal Revenue Service. The LITC provides legal services to all eligible residents of Hillsborough and Pasco counties.  Individuals who are at or below 250 percent of the poverty level are eligible, and in compelling circumstances, services can be provided to clients above that level. If you encounter clients who are having problems with the IRS, please have them contact us directly at (813) 232-1343.  

When the IRS finds a problem with a return, its first notice gives the taxpayer an opportunity to send more documentation to explain why the taxpayer believes the tax return as prepared is correct. If the taxpayer ignores this notice or fails to provide sufficient documentation, the IRS issues a Notice of Deficiency. This second notice gives the taxpayer 90 days to file a petition in Tax Court. An appeals officer and/or IRS counsel will contact the taxpayer prior to the court hearing to try to come to agreement on some or even all of the issues in the case. Instead of Tax Court, the taxpayer can elect to go through an appeals process, which is designed to be fair and impartial to both the IRS and to the taxpayer. If the appeals process does not resolve the issues, the taxpayer can request mediation as long as the case is not filed in Tax Court.  

Unfortunately, some taxpayers do not respond to these initial contacts from the IRS, nor do they seek assistance until after the IRS places a lien or levy on their income and/or assets. Some will qualify for “Currently Not Collectible” status due to low income and lack of resources. Once the IRS agrees that the taxpayer cannot pay the debt at this time, the IRS suspends collection activities, but the interest and the debt continue to grow. Another option is to submit an Offer in Compromise documenting all assets and resources and asking the IRS to agree to allow the taxpayer to pay less than the total amount of the debt in installments within two years. If the IRS accepts the offer and the taxpayer makes all of the payments, then the debt is considered paid. If the IRS rejects the offer, the taxpayer still has the option of requesting mediation. Taxpayers can also ask the IRS to put them on an installment agreement allowing them up to six years to pay back the tax debt and interest.     

Most clients we see at the LITC feel overwhelmed by their tax problems and appreciate the assistance we provide. The LITC welcomes members of the Bar who would like to assist low-income residents on a pro bono basis. For attorneys who do not practice tax law, we plan to offer a training session with members of the HCBA Tax Law Section as instructors. For more information about volunteering, go to and click on the “Give Help” tab to register to become a volunteer.