C. OTHER ELIGIBILITY REQUIREMENTS

i. Using Grant Funds to Support Other Activities Is Prohibited

An organization awarded an LITC grant may provide qualifying LITC services within a broader range of activity. For example, a clinic may provide representation in nontax matters such as landlord/tenant disputes or family law cases and representation in tax matters provided LITC grant funds are used only to support the representation of eligible taxpayers in controversy with the IRS and/or a state or local tax agency concerning the same or related tax matter. LITC grant funds may also be used for properly allocated portions of indirect costs of the organization that support LITC grant activities.

ii. Charging More Than a Nominal Fee for Services Is Prohibited

An LITC may not charge more than a nominal fee for its services; see Key Terms and Definitions. The goal of the LITC Program is to increase access to representation, education, and advocacy services for low-income taxpayers. If a clinic charges an amount that is not nominal and it results in fewer taxpayers assisted, the goal of the program is not being achieved. If a clinic charges a nominal fee, it must:

n Charge that same fee to all taxpayers, regardless of the services being sought;

n Not use a sliding scale based on income; and

n Not charge a separate or additional fee (even if it is nominal) to prepare a tax return or a claim for refund.

NOTE: Reimbursement of actual costs incurred ( e.g., photocopying, court costs, expert witness fees) is not considered a fee and therefore is permitted.

iii. Compliance with Federal Tax and Nontax Requirements

Federal Tax Debts

The IRS will not award an LITC grant to an applicant noncompliant with a federal tax return filing or payment obligation. Consequently, an applicant must be in full compliance with federal tax responsibilities when applying for an LITC grant and throughout the grant year. Standard Form 424, Application for Federal Assistance, requires the applicant to state whether it is delinquent on any federal debt and if so, to provide an explanation. The LITC Program Office also conducts reviews to confirm applicants’ compliance with federal tax responsibilities and other terms and conditions of the grant. See Section III.C.i, Using Grant Funds to Support Other Activities Is Prohibited.

An outstanding federal tax debt is any unpaid federal tax liability, including penalties and interest, that has been assessed, is not disputed, and for which all judicial and administrative remedies have been exhausted or have lapsed. An applicant or grant recipient will not be treated as noncompliant for purposes of IRC § 7526 (and therefore still eligible for funding) if the applicant or grant recipient is in a dispute with the IRS regarding a federal tax liability or has entered into and remains current with an installment agreement or other payment arrangement with the federal government to satisfy any federal tax liabilities. If the applicant is working with someone at the IRS to resolve an outstanding federal tax issue, they should provide the individual’s name, the office in which they work, and their phone number when completing Standard Form 424.

IRC § 6103 prohibits the LITC Program Office from disclosing a federal tax compliance issue to anyone who is not authorized to receive the taxpayer’s tax information. Therefore, to facilitate the resolution of any potential federal tax compliance issues, Form 13424-M, Low Income Taxpayer Clinic (LITC) Application Narrative, requests contact

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information for the Tax Compliance Officer (TCO), the individual responsible for handling the applicant’s federal tax matters. Some applicants are part of a larger organization ( e.g., an academic institution that operates a clinic), in which case the LITC Program Office must be able to verify that the sponsoring organization does not have a federal tax compliance issue before awarding grant funds.

The TCO must be the individual responsible for the applicant organization’s federal tax matters. To assist with resolving potential tax compliance issues and to prevent the IRS from making an unauthorized disclosure, applicants should provide documentation ( e.g., articles of incorporation or a Form 2848, Power of Attorney and Declaration of Representative, signed by the appropriate official) that shows how the individual listed as TCO on Form 13424-M is properly authorized to receive tax information. When providing articles of incorporation, ensure it is the most recent version. When providing Form 2848, be sure of the following:

n All required fields are completed;

n In Section 3, the type(s) of tax are listed ( e.g., 940, 941, 1120, 1065, 990);

n In Section 3, both current and past tax years are listed ( e.g., 2025, 2024, 2023, 2022, 2021);

n In Section 7, the form is signed by an officer of the corporation authorized under the articles of incorporation

to designate an individual to receive federal tax information for the entity; and

n In Part II, the form is signed by the person being authorized to receive the tax information.

Complying with federal tax obligations is a requirement to receive an LITC grant, so it is imperative that the designated individual be knowledgeable and prepared to promptly address any federal tax issues of the applicant or the sponsoring organization. Failure to provide an appropriate contact could delay application processing if the LITC Program Office identifies a federal tax compliance issue of the applicant or its sponsoring organization and needs to discuss the issue further. In addition, if the LITC Program Office cannot speak with the appropriate contact to ascertain the status of the organization’s efforts to address a federal tax compliance issue, no grant funds will be awarded. Similarly, even after grant funds have been awarded, the LITC Program Office performs tax compliance checks throughout the grant year. Without an appropriate contact with whom the LITC Program Office can discuss a tax compliance issue, if a tax compliance issue arises during the grant year, the LITC Program Office may need to restrict the clinic’s access to grant funds.

Federal Nontax Requirements

The IRS will not award an LITC grant to an applicant that is noncompliant with a federal nontax filing or payment obligation. An outstanding federal nontax debt is an unpaid federal liability (other than a federal tax obligation) that has been assessed, is not disputed, and for which all administrative and judicial remedies have been exhausted or have lapsed. An applicant or grant recipient will not be treated as noncompliant for purposes of IRC § 7526 (and therefore still eligible for funding) if the applicant or grant recipient is in a dispute with the federal government regarding a federal nontax liability or has entered into and remains current with an installment agreement or other payment arrangement with the federal government to satisfy any outstanding federal nontax obligations. The LITC Program Office uses SAM to help determine whether an applicant or grant recipient is eligible to receive payments. See Section III.C.i, Using Grant Funds to Support Other Activities is Prohibited.

iv. Debarment and Suspension

When applying for a grant, applicants must make certain certifications and provide certain assurances. One of those certifications is the Certification Regarding Debarment, Suspension, and Other Responsibility Matters-Primary

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Covered Transactions. Applying the “common rule” on non-procurement, debarment, and suspension ⁵ adopted by the Department of the Treasury at 31 CFR Part 19, Subpart C, an applicant must certify that its organization and the clinic’s proposed key personnel are not presently debarred or suspended from covered transactions by any federal agency. In addition, an applicant must indicate that within the three-year period before applying for a grant, its organization and the clinic’s proposed key personnel have not been convicted of or had a civil judgment rendered against them for fraud, theft, or certain other offenses, and have not had one or more public transactions terminated for cause or default. An applicant must also indicate that its organization and the clinic’s proposed key personnel are not presently charged, criminally or civilly, with certain offenses.

Applicants may check the status of the organization and the clinic’s proposed key personnel before applying for a grant by searching on SAM. If an applicant identifies incorrect information about the organization or the clinic’s proposed key personnel, the applicant should contact the agency that reported the information. The LITC Program Office utilizes SAM to determine eligibility of grant applicants and prevent improper payments.

5 The “common rule” means the procedures used by federal agencies to suspend, debar, or exclude individuals or entities from participation in non-procurement transactions under Executive Order 12549. See also Executive Order 12689.

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