D. KEY TERMS AND DEFINITIONS

90/250 requirement was established by IRC § 7526 and provides that at least 90% of the taxpayers represented by a clinic have incomes that do not exceed 250% of the Federal Poverty Level. The LITC Program uses the poverty guidelines published annually by the Department of Health and Human Services (HHS). See Section VI.C.xii, Representing Low-Income Taxpayers.

Advocacy as it relates to LITCs is zealously protecting the rights of low-income and ESL taxpayers. Advocacy can occur on an individual or systemic basis. A substantial portion of LITC work involves assisting clients with an IRS controversy. Clinics advocate for the taxpayers they represent by ensuring they pay the correct amount of taxes, exploring all possible options for relief, and assisting them in making a fully informed decision about how best to proceed given the facts of the case and the taxpayer’s situation. Notwithstanding the unique nature of each taxpayer’s circumstances, similarly situated taxpayers often experience similar problems with tax administration. Advocacy includes but is not limited to identifying systemic-level issues and sharing them with TAS. TAS investigates the submissions, proposes solutions, and works with the IRS to resolve the issues, or elevates them to the National Taxpayer Advocate. Advocacy may also include responding to public requests for comments on IRS regulations or procedures and filing amicus briefs in cases addressing issues that directly impact low-income and ESL taxpayers. For purposes of the LITC grant, advocacy does not include lobbying. See Section VI.D.iii, Lobbying Restrictions.

Amount in controversy is the federal tax amount in dispute for each tax year for which the LITC is representing a taxpayer. Often, the amount in controversy is the amount owed or the refund requested. In some disputes with the IRS, however, the amount in controversy is the amount associated with an action taken by the IRS. The amount in controversy includes the tax liability in dispute for a tax year plus any related penalties imposed. Whether interest is included in the amount in controversy will depend on the nature of the controversy. The amount in controversy is limited to the amount in dispute, which may be less than the amount specified in an IRS statutory notice of deficiency, a notice of determination, or a notice and demand. If the taxpayer is disputing the amount due in more than one tax year or period, the amount in controversy is determined separately for each year. See Section VI.C.xii, Representing Low-Income Taxpayers, Amount in Controversy Limit.

Cases are those matters that LITCs count and report in inventory when a taxpayer or married taxpayers retain the clinic to represent them in a controversy before the IRS or a federal court. To be counted as a case, the clinic must take steps to address the controversy, including developing a plan for representation. If the clinic represents a married couple, it is counted as one case. If a taxpayer stops communicating with the clinic after a representation plan has been developed, the clinic may still count that matter as a case. If a clinic refers the matter to a qualified representative, it may also count it as a case if the clinic provides ongoing monitoring and support.

Clinic refers to an LITC. See the definition of LITC. Throughout this publication, the terms clinic, LITC, and grant recipient are used interchangeably.

Consultation encompasses a discussion with or correspondence to a taxpayer designed to address the taxpayer’s unique circumstances and involves an analysis tailored to the taxpayer’s factual situation. A consultation does not necessarily result in advocating for the taxpayer before the IRS or relevant court in a representative capacity but might include fact-gathering and contact with the IRS that does not rise to the level of advocacy.

Controversy with the IRS is a proceeding brought by the taxpayer under the IRC or any dispute between an individual and the IRS concerning the determination, collection, or refund of any tax, penalties, or interest. The definition is very broad and encompasses all types of disputes arising under the IRC, except criminal tax matters. For example, a controversy includes a dispute related to eligibility for the Earned Income Tax Credit, a revocation or denial of a passport under IRC § 7345, and certain civil actions arising under IRC §§ 7431 to 7435. The dispute may be pending in a federal court or in any tax administration function of the IRS ( e.g., Examination, Collection, Appeals, Accounts Management). The dispute does not have to arise under the IRC if the dispute is with the IRS; for example, a controversy includes civil penalties arising under Title 31 if the IRS is the other party involved in the controversy. While representing a taxpayer in a controversy with the IRS, an LITC may also need to represent the taxpayer in a controversy with a state or local tax agency concerning the same or a related tax matter. Though a controversy does not include a federal criminal tax matter, it may include a state criminal tax matter. A controversy may be considered a civil matter in the federal context but a criminal matter under state or local law. If the LITC is already representing the taxpayer in the federal civil matter, it may be appropriate for the LITC to expand the scope of the representation to include the state or local tax matter.

Educational activities (also referred to as programs to inform) advise ESL or low-income individuals about their rights and responsibilities as taxpayers and tax issues of significance to the intended audience. To be considered an educational activity, information about a specific tax topic or topics must be conveyed to the audience.

6 LOW INCOME TAXPAYER CLINICS

LITC Program Description

LITCs should address a wide range of substantive tax issues in their educational programs and materials ( e.g., filing requirements, tax recordkeeping, family status issues, refundable credits, the Affordable Care Act, worker classification, identity theft, information about the audit and appeals process, collection alternatives). Selecting education topics relevant to community needs and offering the presentations and/or presentation materials in languages commonly spoken in the community allow LITCs to reach taxpayers who otherwise might experience great difficulty communicating with the IRS. These programs are delivered in-person to a live audience with participants registering, signing in, or being counted and allow for audience interaction with the presenter. Clinics may also use virtual platforms to deliver these programs and count them as educational activities for LITC reporting when there is a way for participants to be counted and for the presenter and participants to interact. Viewers of recorded materials in the year posted may be counted as additional participants so long as the organization monitors the platform so that viewers may pose and receive answers to questions. Generally, television and radio appearances are not counted as educational activities.

ESL taxpayers are individuals for whom English is not their first language, including those who communicate using sign language. These individuals may have an additional challenge in understanding taxpayer rights and responsibilities. Consistent with IRC § 7526, delivering taxpayer education to ESL taxpayers is a priority. ESL is different than Limited English Proficiency (LEP). LEP refers to an individual’s relative ability to communicate and receive information in English. LEP taxpayers are a subset of ESL taxpayers but not all ESL taxpayers are LEP taxpayers.

Grants.gov is the government website used by federal agencies to post discretionary notices of funding opportunities.

Key personnel are individuals necessary for the successful functioning of the LITC. Key personnel are responsible for ensuring that the LITC’s day-to-day operations run smoothly, the LITC program is delivered in accordance with the terms and conditions of the grant, finances are properly administered, legal arguments are sound, and educational materials are accurate. Key personnel include the Clinic Director, Qualified Tax Expert (QTE), and Qualified Business Administrator (QBA). See Section VI.C.i, Standards for Operating a Low Income Taxpayer Clinic.

Low-income taxpayers are individuals whose income does not exceed 250% of the Federal Poverty Level. The Federal Poverty Guidelines are updated annually (usually in late January) by the Department of Health and Human Services. The LITC Income Guidelines, current as of publication, can be found in Section VI.C.xii, Representing Low-Income Taxpayers. A sole proprietor is considered an individual and may be assisted by an LITC if otherwise eligible. A business or other entity is not a low-income taxpayer eligible for LITC representation. An individual trying to resolve a tax liability arising from personal involvement with a business can be a low-income taxpayer. For example, an individual who is personally liable for taxes owed from a business ( e.g., a responsible person within the meaning of IRC § 6672) may be a low-income taxpayer, provided the individual otherwise meets the definition.

LITC is an organization receiving a grant pursuant to IRC § 7526.

Nominal fee is a fee that is insignificantly small or minimal. A nominal fee is a small payment, bearing no relation to the value of the representation provided, considering all the facts and circumstances. A nominal fee must be a flat fee; the fee cannot fluctuate based on an hourly rate or the type of services the LITC provides. A nominal fee does not include reimbursement for actual costs incurred ( e.g., photocopies, court costs, expert witness fees).

Outreach is an activity conducted by an LITC that involves effectively publicizing and promoting the clinic’s services regarding representation, education, and advocacy on behalf of low-income and ESL taxpayers. LITCs are encouraged to identify linguistic populations, geographic service areas, or other segments of the low-income taxpayer community in which to focus outreach efforts. Outreach activities may involve direct communication (in-person contact or in writing) with taxpayers or may be accomplished through contacts with other organizations or groups that assist low-income and ESL taxpayers. Additional guidance on effective outreach can be found in Section VI.C.iv, Developing a Community Outreach Plan. Outreach plans should be developed before the start of the grant year during which representation and other assistance will be offered.

Pro bono panel is a group of qualified representatives (attorneys, certified public accountants (CPAs), or enrolled agents (EAs)) who have agreed to accept taxpayer referrals from an LITC and provide representation or consultation services free of charge to low-income or ESL taxpayers. Clinics may also use volunteers to assist with other tasks such as education, outreach, or mentoring students.

Program plan is a description of the clinic’s planned operations, including a description of the services to be offered; how, when, and where the services will be delivered; who will provide the services; the intended recipients of the services; and numerical goals. The terms and conditions of an LITC grant include the applicant’s program plan and any subsequent changes to the plan agreed upon between the Program Office and the clinic.

Qualified representative is:

n An attorney;

n A CPA;

n An EA authorized to practice before the IRS;

n An individual authorized to appear before the court where the controversy with the IRS will be adjudicated; or

n An individual authorized to practice before the IRS pursuant to 31 Code of Federal Regulations (CFR)

§ 10.7(d) ( e.g., a student, law graduate, tribal court advocate, other individual for whom the IRS has issued a special appearance authorization). See Section VI.C.xii, Representing Low-Income Taxpayers, Representation by Students and Law Graduates.

For individuals other than students or law graduates, the IRS Commissioner (or delegate) has the authority to issue special appearance authorizations to allow them to practice before the IRS. For students and law graduates, the Director of the LITC Program has the authority to issue special appearance authorizations; however, the student or law graduate must be supervised by a qualified representative. See Delegation Order 25-18 (Rev. 5), Internal Revenue Manual (IRM) 1.2.2.15.18.

NOTE: An unenrolled return preparer who can practice before the IRS based upon return preparation is not a qualified representative for the LITC Program because the authority of the unenrolled return preparer to act as a representative is limited to only certain taxpayers and select functions of the IRS. For details regarding limited practice before the IRS by individuals who are not attorneys, CPAs, or EAs, see Rev. Proc. 2014-42, 2014-29 I.R.B. 192.

Referral means the referral of low-income taxpayers to qualified representatives or to an LITC for representation.

Uniform Guidance refers to 2 CFR Part 200 (and the Treasury Department’s implementation thereof, found at 2 CFR Part 1000), which contains uniform administrative requirements that relate to the pre-award, post-award, closeout, and audit phases of the federal grant life cycle. See Section VI.D, National Policy Requirements and Administrative Requirements, for a more detailed discussion.

Additional terms and definitions are available in the Glossary.

8 LOW INCOME TAXPAYER CLINICS

FEDERAL AWARD INFORMATION