What Kind of Help Can Low Income Taxpayers Receive

By | January 4, 2016

Low income taxpayer means 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. Net earnings from a sole proprietorship, a single shareholder S-corporation, or a single member LLC are included in income for purposes of determining if a taxpayer is low income.

Business Entity and Taxpayer Assistance

However, a business entity is not a low income taxpayer eligible for LITC representation, even if an owner, partner, shareholder, beneficiary, or member of the business entity is an individual whose income does not exceed 250 percent of the poverty level.


What is a controversy with the IRS?

Controversy means a dispute between an individual and the IRS concerning the determination, collection, or refund of any tax, penalties, additions to tax, or interest under the Internal Revenue Code, and includes any proceeding brought by the taxpayer under Title 26. In representing a tax – payer in a controversy with the IRS, an LITC may also need to represent the taxpayer in a contro – versy with a state or local tax agency concerning the same or related tax matter. A controversy includes a dispute related to the tax provisions of the Affordable Care Act. A controversy does not include a criminal tax matter, but may include certain civil actions arising under the Internal Revenue Code, for example those arising under IRC §§ 7431—7435.


What is the amount in controversy?

Amount in controversy means the amount at issue for each tax year for which the LITC is representing the taxpayer. The amount includes the tax liability in dispute for a tax year, plus any related additions to the tax, additional amounts, and penalties imposed. Interest is generally excluded from the amount in controversy, unless the amount of interest is disputed independently from the associated tax liability. For example, in the collection context (e.g., notice and demand, notice of determination under IRC § 6330), interest is always in dispute and is therefore included in the amount in controversy. Further, the amount in controversy is limited to the amount in dispute, which may be less than the amount specified in a statutory notice of deficiency. If the taxpayer is disputing the amount due in more than one tax year or period, the amount in controversy is the amount in dispute for a single tax year.


What kind of services do Low Income Taxpayer Clinics Provide?

LITCs are required to offer tax education to low income taxpayers and taxpayers who speak English as a second language (ESL). Educational activities should address taxpayer rights and responsibilities as well as tax issues of particular significance to the intended audience. Whenever possible, LITCs are urged to use face-to-face contact (whether in consultations or in a group workshop), as it is an excellent method for educating taxpayers. Clinics may address a wide range of substantive tax issues in their educational programs and materials, including: ` tax recordkeeping; ` filing requirements and due dates; ` the Taxpayer Bill of Rights; ` eligibility for various deductions and credits; ` tax provisions of the Affordable Care Act; ` worker classification; ` identity theft; ` innocent spouse relief;` the audit and appeals process; or ` collection alternatives.


What else do Low Income Taxpayer Clinics (LITCs) do?

LITCs are responsible for creating, printing, and distributing the materials used to educate taxpayers. Materials should be prepared in languages appropriate for ESL taxpayers. LITCs are also encouraged to provide education to staff, volunteers, and other tax practitioners on issues impacting low income taxpayers. Offering presentations that award Continuing Professional Education (CPE) or Continuing Legal Education (CLE) credits can be a valuable tool for recruiting clinic volunteers.