C. ADMINISTRATIVE REQUIREMENTS

i. Standards for Operating a Low Income Taxpayer Clinic

This publication provides baseline standards of operation for organizations funded with an LITC grant. The standards ensure that all LITCs provide consistent and quality service to low-income and ESL taxpayers.

LITCs are required to fill the following key staff positions:

Qualified Tax Expert (QTE) is, generally, a staff member of the clinic (or a volunteer in the case of the ESL Education Program). The QTE must have sufficient tax law expertise to oversee technical, substantive, and procedural tax matters. The QTE must be an attorney, CPA, or EA who is currently authorized to practice before the IRS and provide representation on behalf of low-income taxpayers in disputes with the IRS. The QTE is also responsible for reviewing all educational materials for accuracy before distribution.

Qualified Business Administrator (QBA) is a staff member with sufficient business administration expertise to oversee the clinic’s business operations. If a department fulfills this requirement, as opposed to a single individual, please provide details in the application about the staff member who oversees the department. The QBA must demonstrate education or experience with business or program administration, such as internal controls, grant funds management, budgeting, procurement, or the equivalent. A grantee may outsource part of its accounting function, but a staff member must still be designated as the QBA.

Clinic Director is a staff member with overall management responsibility for the clinic. The Clinic Director may also be the QTE or QBA, if qualified. The Clinic Director manages day-to-day clinic operations, prepares or reviews the required clinic reports, and may sign reports as the clinic’s authorized representative. The Clinic Director serves as the primary contact person for both the LITC Program Office and the Local Taxpayer Advocate office. The Clinic Director must be able to promptly respond to LITC Program Office inquiries and should have a thorough knowledge and understanding of the LITC’s operations.

As a general rule, all key personnel must be employees of the sponsoring organization. Using independent contractors or volunteers to fill key positions must receive advance approval in writing from the LITC Program Office. Utilizing volunteers or independent contractors to fill key staffing positions may be permitted in limited circumstances but only as a temporary measure. The Program Office will work closely with the organization to develop a timeline for filling the position with a paid employee of the organization.

Access to Representation in the U.S. Tax Court and Other Federal Courts

It is the policy of the LITC Program Office that LITCs providing representation services have a staff member or volunteer who is admitted to practice before the U.S. Tax Court and other federal courts to represent taxpayers in litigation matters. If an applicant does not have a staff member or a volunteer identified to provide these services at this time, the applicant is asked to develop and submit a plan to do so. If the clinic does not have current plans to provide this service, it may impact the award of funds or the amount awarded. The Clinic Director and the QTE must not be under suspension or disbarment from practice before the IRS and must be in good standing with all relevant professional state licensing authorities and federal courts. The LITC Program Office will seek confirmation of the status of these individuals before awarding any grant funds.

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Maintaining a Physical Location

LITCs must maintain a physical place of business and a permanent address. A physical place of business means a permanent office space where clients can be received and files are kept. Telephones must be answered during business hours; however, the telephone need not be answered at the same location as the physical place of business.

If an applicant proposes utilizing workshare space as a physical place of business, the workshare space must satisfy the following criteria:

n The clinic must be able to identify it as the clinic’s place of business in letterhead and correspondence.

n The clinic must have access to a private office and private meeting space to enable confidential conduct

of business.

n Taxpayer records or information may only be received and stored at the location if the individual receiving the

information has been trained to maintain confidentiality and security.

n Maintaining confidentiality and security requires that information received must be kept in a secure location,

access must be limited to only those who have a need to access, and those receiving information agree to hold the information in confidence.

Applicants with only a virtual office will not be awarded LITC grant funds.

Providing a Toll-Free Number

To increase access to low-cost representation, grant recipients are encouraged to provide a toll-free telephone number. Grant funds may be used to pay for a toll-free number. See 2 CFR § 200.471.

Training Staff and Volunteers

LITCs must provide training to clinic staff, volunteers, and other program participants (such as fellows and interns) to increase the knowledge and skills necessary to effectively deliver tax representation, education, and advocacy services. Clinic Directors must ensure that the LITC staff, volunteers, and other program participants receive training based on their knowledge, skills, and experience and the needs of the taxpayers they will assist. Clinic Directors are encouraged to develop a training plan for all program participants who provide services to taxpayers. Besides substantive technical and legal training, clinics should provide staff training regarding grant requirements such as determining the amount in controversy and the 90/250 requirement.

As part of a comprehensive training plan, the LITC Program Office encourages clinic staff and volunteers to attend continuing professional education programs sponsored by the IRS and professional organizations with expertise in tax law and tax controversy resolution relevant to low-income and ESL taxpayers. Grant recipients may use grant funds to attend such programs if the subject matter is necessary for the performance of the grant and the cost is reasonable. See 2 CFR §§ 200.403(a) and 200.473.

Clinics are also encouraged to conduct Continuing Legal Education (CLE) or Continuing Professional Education (CPE) training for staff and volunteers. Clinic training is reported on Form 13424-R under the Clinic Information section.

Maintaining Access to Tax Research Materials

LITCs must have convenient access to an adequate tax library and research materials, including the current version of the IRC and related Treasury Regulations in hard copy or electronic format. Access to research materials may be through online resources. Grant recipients may use grant funds to acquire tax research materials. See 2 CFR § 200.454(B).

ii. Low Income Taxpayer Clinic Program Office Webinars

Unless otherwise noted below, the Program Office will announce webinars on the LITC Toolkit. The Toolkit is the main way that the LITC Program Office communicates with clinics. The password-protected site is accessible to all those involved with the clinic, including staff, students, and volunteers. The password is provided to all funded clinics and can be obtained any time during the grant year from a clinic’s assigned Advocacy Analyst. The password is changed annually, and all clinics will be notified about the new password when it is updated. Some webinars may be geared to specific individuals in the organization responsible for performing the activity highlighted in the webinar. The LITC Program Office encourages participation in the webinars and information sharing about the webinars with the appropriate individual(s) associated with the clinic.

Application Webinars

The LITC Program Office conducts yearly webinars to provide potential applicants with information about the application requirements and process. The intended audience for the webinars includes applicants proposing to start an LITC or expand the work of existing clinical programs.

Join the LITC Program Office for optional webinars to learn more about the LITC Program and the application process. Details are available at www.taxpayeradvocate.irs.gov/about-us/litc-grants. A separate webinar for Returning applicants (New and Continuation Requests) will be announced on the LITC Toolkit.

Administrative and Technical Topic Webinars

The LITC Program Office also conducts and coordinates webinars to provide information on general grant topics, such as requirements for completing grant applications and reports, legal issues impacting low-income taxpayers, and substantive topics that will help clinicians advocate for taxpayers. The LITC Program Office will also announce webinars on tax-related topics sponsored by other organizations such as the IRS and bar associations. All webinar announcements will be made through the LITC Toolkit. Although the LITC Program Office will provide information about webinars sponsored by other programs or organizations, it does not endorse the webinar sponsors or any materials distributed during such webinars. An LITC’s decision whether or not to participate in such webinars will not result in the LITC Program Office giving any preferential or negative treatment to the LITC. The LITC Program Office is merely informing LITCs of training opportunities that may be of interest to clinicians.

iii. Annual Low Income Taxpayer Clinic Grantee Conference

Applicants notified they have been selected to receive a 2027 grant award must attend the Annual LITC Grantee Conference, which is anticipated to be held in December 2026. Generally, the Clinic Director and the QTE must attend the conference in its entirety unless the Director of the LITC Program has excused them in writing from attending all or part of the conference. The LITC Program Office will provide the dates and location of the conference when notifying applicants that they have been selected for an award if the details are known at that time. Information about the conference will also be provided on the LITC Toolkit.

Cost of Attendance

The cost of attending the conference ( e.g., transportation, hotel, meals) can be paid with grant funds (or can qualify as matching funds if travel expenses are paid using non-federal funds) and should be included in an applicant’s

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budget. For more information, see Section IV.E.i, Spending Low Income Taxpayer Clinic Grant Funds and Matching Funds. LITC grant funds or matching funds generally may not be used to pay the cost of more than two conference attendees. However, an LITC may request an exception to this policy in special circumstances. For example, a clinic is planning to send the QTE and Clinic Director to the conference, but a new staff attorney was recently hired and will devote a significant amount of time representing low-income taxpayers. Since the third person will be doing controversy work and the conference provides an economical and beneficial means of providing substantive tax controversy education, the Director of the LITC Program may approve the use of LITC grant funds to cover all or a portion of the cost for attendance of the third person.

More Than Two Conference Attendees

If a grant recipient wishes to send more than two staff members to the conference, a written request must be submitted to the Director of the LITC Program within two weeks before the start of the conference. The Director or their designee will grant approval to timely submitted requests for additional registrants if space is available. If the grant recipient seeks to use LITC grant or matching funds to support a third attendee, the request must explain the special circumstances and include the estimated costs. The Director of the LITC Program has the discretion to allow the clinic to use grant funds for all or a portion of the costs to send a third individual. Without an exception or if an exception is denied, any conference expenses ( e.g., transportation, hotel, meals) of additional attendees are the responsibility of the grant recipient and must not be paid using federal or matching grant funds.

Requesting to Be Excused From Attendance

If the Clinic Director or QTE cannot attend all or part of the conference, a request for an exception must be submitted in writing within two weeks before the start of the conference. The request should identify the critical reason for the exception request, and the name, title, and duties of any other person who will attend the conference on behalf of the grant recipient.

All requests for exceptions related to the conference as detailed above should be addressed to the Director of the LITC Program and sent to the clinic’s assigned Advocacy Analyst. The best way to send exception requests is via email or e-fax; see Section VII.F, Contacting the Low Income Taxpayer Clinic Program Office. Instructions for submitting exception requests can also be found on the LITC Toolkit under Clinic Training > LITC Grantee Conference.

iv. Developing a Community Outreach Plan

LITCs should develop an outreach plan to publicize the clinic and its services to low-income and ESL taxpayers. LITCs should promote themselves as providing representation and education on behalf of low-income and ESL taxpayers. Outreach activities may involve direct communication with taxpayers or be accomplished through contacts with other organizations or community groups that assist 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.

Publicizing Low Income Taxpayer Clinic Services

LITCs may use a variety of means to publicize their services, including brochures, flyers, placards and posters, free newspaper listings, public service announcements on radio and television, websites, and social media. If a clinic wants to use grant funds for paid advertising, it must request permission to use grant funds for this purpose and explain why free publicity by itself will not be effective in reaching taxpayers. LITCs should also publicize their program through their organization’s website and community partners. In promoting a clinic on a larger organization’s website, consider the taxpayers’ needs and how taxpayers can easily locate information about the clinic and its services. Paid advertisements must receive advance written approval by the LITC Program Office and should be detailed in the budget submitted.

Publicity materials and announcements to promote LITC services must focus on core services:

n Representation in controversy cases;

n Consultations about tax matters;

n Education about taxpayer rights and responsibilities; and

n Advocacy efforts to resolve systemic tax issues that affect low-income and ESL taxpayers.

Grant recipients are encouraged to publicize their program through their organization’s website, social networking platforms, and community partners.

Publicity materials may not promote tax return preparation services or Individual Taxpayer Identification Number (ITIN) application preparation assistance. LITCs may prepare tax returns and ITIN applications only in two limited contexts. See Section VI.C.xv, Preparing Tax Returns and Individual Taxpayer Identification Number Applications.

LITCs must include a message on their website and in all publicity materials and announcements stating that the clinic does not generally provide tax return preparation.

Brochures, flyers, or other clinic information that may be distributed in IRS offices or at joint outreach events with IRS functions should contain language to indicate that a taxpayer’s decision to obtain representation from an LITC will not result in the IRS giving preferential treatment in handling the dispute or problem and will not affect the taxpayer’s rights before the IRS.

Such disclaimers need not be worded exactly as above but must convey this principle. In addition, clinics may not use the IRS or TAS logos in any advertising materials. Clinics are strongly encouraged to use the LITC logo in all newly printed or published materials and on their websites. High quality electronic files of the logo are available on the LITC Toolkit. The logo should not be altered.

With the passage of the Taxpayer First Act, Section 1402, ⁹ IRS employees can refer a taxpayer to a specific LITC for assistance without violating the applicable ethical standards of conduct. Before the change in law, IRS employees were prohibited from referring a taxpayer to a particular LITC practitioner or a specific LITC for assistance with an IRS issue. All IRS Taxpayer Assistance Center (TAC) locations are annually provided with copies of Publication 4134, Low Income Taxpayer Clinic List, to facilitate these referrals. In addition, Section 1401 of the Taxpayer First Act promotes collaboration between LITCs and Volunteer Income Tax Assistance (VITA) grant recipients by encouraging VITA grant recipients to advise taxpayers about the availability of LITCs, the eligibility requirements for assistance, and the locations and contact information for the clinics.

9 Pub. L. No. 116-25, § 1402, 133 Stat. 981, 997 (July 1, 2019).

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Identifying Effective Outreach Strategies

To enhance efficiency and identify effective strategies, LITCs are encouraged to implement a process that tracks how taxpayers seeking services learned about the clinic and the services offered. For example, this information could be obtained on the intake or screening form completed by low-income taxpayers seeking representation or advice. For educational activities, the clinic could request that attendees indicate on a sign-in sheet how they learned about the event. The LITC Program Office may ask for information as to how taxpayers hear about the clinics to share information with the IRS about which forms, publications, and notices are most effective at driving taxpayers to seek LITC assistance.

v. Building Community Partnerships

LITCs should develop and maintain relationships with other community-based organizations that assist lowincome and ESL individuals. Community-based organizations might include local social service agencies such as human services or workforce development; community action programs providing heating assistance or head start programming; schools; community colleges; religious organizations; domestic violence shelters; and senior meal sites. Effective community partnerships help LITCs enhance visibility in the community, access taxpayers in insular hard-to-reach communities, better understand nontax issues that affect low-income individuals and families, and establish a framework for mutual referrals of taxpayers needing services. Clinics should also network with individuals and groups within the clinic’s sponsoring organization to share information about the LITC Program to promote cross-referrals of cases and to collaborate on educational activities and outreach opportunities.

BEST PRACTICE

A regular schedule for updating staff within the sponsoring organization can be very helpful. For example, provide presentations about clinic activities at monthly staff meetings or distribute a quarterly newsletter to colleagues highlighting clinic success stories and impactful outreach and educational events. These regular communications will help staff remember to identify tax issues in their cases and refer to the clinic when needed.

vi. Networking With Other Low Income Taxpayer Clinics

LITCs are encouraged to maintain an active network with other clinics. Networks provide an opportunity for clinics to collaborate on tax issues that affect low-income and ESL taxpayers, discuss case strategies, share ideas on education and outreach, and share training on tax practice and procedures. Clinics are also encouraged to submit best practices developed through networking to the LITC Program Office so they can be shared with other clinics to improve the overall quality of the LITC Program.

vii. Mentoring

The LITC Program Office encourages experienced grant recipients to become mentors to provide guidance and technical assistance to other LITCs. The LITC Program Office may ask experienced LITC clinicians to consider mentoring less experienced clinicians. That assistance may include recommendations for developing processes, procedures, or policies; providing samples of substantive education materials for clinic staff or taxpayers; helping develop outreach or education plans; and providing suggestions or other feedback on casework.

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viii. Technical Assistance

Technical assistance is a discussion with a tax practitioner or other service provider designed to provide brief advice about a federal tax issue. This assistance may be provided to an LITC clinician from another program, a member of the private bar, a colleague, or a local VITA site member. However, if advice is given to a staff member of the clinician’s sponsoring or colocated organization to provide to a client about a specific tax issue, it is probably more properly counted as a taxpayer consultation, not a technical consultation. Grant recipients may report the number of technical assistance consultations provided under the Advocacy section on Form 13424-R, Low Income Taxpayer Clinic (LITC) Program Report.

ix. Maintaining Client Confidentiality

Avoiding Unauthorized Disclosure

Tax professionals have ethical requirements to maintain client confidentiality. ¹⁰ LITC employees and volunteers generally must not disclose information relating to the representation of a client to third parties unless the client gives informed consent. The confidential nature of each taxpayer’s information must always be respected, and each employee and volunteer must safeguard taxpayer information against inadvertent or unauthorized disclosure. Thus, it is critical for an LITC to maintain strong information security and limit access to taxpayer information to those who need to know.

Treasury Regulations under IRC § 7216 generally prohibit a grant recipient, its employees, and its volunteers from disclosing or using a taxpayer’s return information except when the tax return preparer has obtained prior written consent from the taxpayer in a manner that complies with the procedures in the regulations and other guidance issued by the IRS. ¹¹ The regulations authorize disclosure or use without consent only in very limited situations, such as pursuant to an order of a court or a federal or state agency or for preparation or audit of state or local tax returns. For unauthorized disclosure or use, IRC § 7216 imposes a sanction of up to one year in prison or a $1,000 fine, or both, plus the costs of prosecution. In addition, the penalty under IRC § 7216 increases to $100,000 in the case of disclosures or uses in connection with taxpayer identity theft. IRC § 6713 imposes a civil penalty of $250 for each disclosure or use, up to $10,000 per calendar year (penalty of $1,000 per disclosure or use if related to identity theft up to $50,000 per calendar year).

Client Information Must Be Redacted From Training Materials

Client information must be redacted from materials before being used for training. This includes deletion of names, addresses, Taxpayer Identification Numbers, and any other information that could reasonably lead to identification of the client. If using a taxpayer’s situation as an example or case study in the training, the material facts must be sufficiently changed to prevent identification of the taxpayer. The LITC Program Office takes protection of taxpayer information seriously, and thus any materials submitted for use during the LITC Grantee Conference must comply with IRS rules for training presentations that explore taxpayer factual scenarios – namely that all taxpayer identifying information and tax data used in course materials must be entirely fictional. IRM 11.3, Disclosure of Official Information, contains instructions, guidelines, and procedures to protect the confidentiality of returns and return information.

10 See, for example, ABA Model Rule of Professional Responsibility 1.6, IRC § 7525, and IRS Circular 230. 11 See 26 CFR § 301.7216-2.

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Sharing Information With the Media

Generally, confidentiality requirements and disclosure restrictions prohibit clinic personnel from providing details about any taxpayer represented by the clinic in response to requests from the media. News reporters and other members of the media do not have a need to know taxpayer information. The LITC must obtain a written waiver from the taxpayer before disclosing any of the taxpayer’s information and be sure the taxpayer fully understands the potential ramifications that could result from disclosing the information, even if the taxpayer is the person requesting that the LITC speak to a member of the media. If the client chooses to share information with the media, suggest to the client that they make it a condition of the interview that the story be produced without photos and names.

Media coverage can create a conflict of interest between the LITC and a client. An article that describes the client’s situation and mentions the clinic’s services may benefit the clinic by providing outreach; however, the clinic must consider any potential negative repercussions that publicity may have on the taxpayer. For example, the taxpayer could be dealing with other nontax issues ( e.g., custody or child support conflicts, other creditors, immigration) that could be negatively impacted by the media coverage. LITCs should clearly communicate to clients that they are under no obligation to share any personal information with the media.

x. Recruiting and Supervising Volunteers

Creating Written Position Descriptions for Volunteers

LITCs are encouraged to create written position descriptions for volunteers and outline the qualifications for each position. These may include whether the volunteer may act as an authorized representative, prior training and experience, educational background, language skills, and other qualifications relevant to providing representation, education, and advocacy on behalf of low-income and ESL taxpayers.

Establishing and Maintaining a Pro Bono Panel

LITCs are encouraged to offer additional taxpayer assistance by recruiting qualified representatives who agree to serve on a pro bono panel, accept cases from the LITC, and represent LITC clients at no cost. Pro bono volunteers may also be recruited for other clinic tasks, depending on their experience and background, such as presenting at educational activities, conducting outreach, or supervising students. Clinics may use volunteers made available through national, state, or local bar associations; societies of accountants; and enrolled agent networks.

Monitoring Referrals to Low Income Taxpayer Clinic Volunteers

LITCs must have a system to monitor referrals and ensure that pro bono representatives are handling cases properly, including taking timely case actions and providing services for free. Ongoing monitoring is not required if referring a case to another LITC. Pro bono representatives may not charge a fee for services, except for reimbursement of expenses such as photocopying and court filing fees.

Referrals May Only Be Made to Qualified Representatives

LITCs may only refer cases to pro bono volunteers for representation if the volunteer is authorized to practice before the IRS or the court where the IRS controversy will be adjudicated.

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Representation Through Referral

An LITC can meet the requirement to provide representation by referring qualified taxpayers to a qualified representative. The representative must agree to provide representation free of charge. One goal in expanding qualifying activities to allow an LITC to refer the majority of or all cases to a qualified representative is to expand access to unserved taxpayers or underserved areas of the country. These types of LITCs can also help to ensure that the resources of current LITCs are maximized. To the extent that these programs are contacted by taxpayers from a locality where existing LITC(s) operate, the program should determine whether a local LITC is able to take the case. If a clinic provides representation primarily through referral, the clinic is encouraged to track cases placed with other LITCs or placed with volunteers on behalf of other LITCs. A future revision of Forms 13424-M and 13424-R is planned which will enable clinics using this service delivery model to set goals and report numbers for these types of referrals.

Referrals After Declining a Case

Generally, no person associated with the LITC should provide representation in a case the clinic declined. Additionally, employees and volunteers of the LITC may not provide representation for a fee to a client of the LITC in a subsequent, separate tax matter. Further, an LITC cannot refer a taxpayer to someone who charges a fee.

For example, suppose an LITC refers a taxpayer in a controversy with the IRS to a member of the LITC’s pro bono panel. On behalf of the LITC, the pro bono representative resolves the dispute. The same taxpayer owns a partnership interest in a family business under audit by the IRS and offers to pay the representative to represent the partnership, as the taxpayer understands the LITC can’t handle tax matters for entities. The pro bono attorney must decline the case and cannot refer the taxpayer to someone else who charges a fee to represent the partnership. Instead, the LITC or representative may refer the taxpayer to a state bar-maintained lawyer referral and information service that will provide the taxpayer with an unbiased referral to an attorney who has experience in the area of law appropriate to the taxpayer’s needs or an organization that provides pro bono assistance.

xi. Recordkeeping and File Management

Maintaining Records of Grant Expenditures

LITCs must maintain adequate internal controls and retain financial accounting records to safeguard all funds, property, and other assets related to the grant. LITCs must have written procedures for approving expenditures from grant funds in accordance with the procurement, payment, and cost principles in the Uniform Guidance. At a minimum, the procedures should address:

n Which individuals have approval authority;

n When written approval is required; and

n What documentation must be submitted for an expense to be approved by the authorized official.

The approval process may differ based on the size and type of expense. Also, LITCs must have written procedures to track their fixed assets and tangible personal property. To avoid subsequent disallowance or dispute based on unreasonableness or non-allocability of an expense, the grant recipient may seek the prior written approval from the LITC Program Office in advance of incurring special or unusual costs. Prior written approval should include the timeframe or scope of the proposed cost. The absence of prior written approval of any element of cost will not affect the reasonableness or allocability of that element, unless prior written approval is specifically referenced under 2 CFR § 200.407, such as purchases of $10,000 or more described in 2 CFR § 200.439(b)(2). Copies of any

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pre-approvals should be retained for three years from the date of purchase. Purchases of $10,000 or more should be noted in the clinic’s financial narrative in the year purchased.

Maintaining Sufficient Detail in Client Records

LITCs must maintain client case records to demonstrate client eligibility for program services and to document the services provided to taxpayers. In certain situations, attorneys’ fees (including fees for pro bono services) may be awarded in a judgment or settlement of an administrative or judicial proceeding concerning the determination, collection, or refund of tax, interest, or penalty. See IRC § 7430(a). Thus, a clinic should keep detailed contemporaneous case records of its controversy work so that if casework presents an opportunity to make a claim for attorneys’ fees, the clinic has adequate records to support an award. Awards of attorneys’ fees are program income and eligible as matching funds, if spent supporting LITC activities.

For each increment of time for which fees are claimed, the records must:

n Identify the date on which the services were performed;

n Describe the nature of those services in detail;

n Identify the individual’s name and position of any representative for whom fees are claimed ( e.g., supervisory

attorney, student, paralegal); and

n Include the associated incremental periods of time spent by that individual.

The services provided by the LITC should be described in sufficient detail to enable the IRS to assess the reasonableness of the amount of time expended in relation to the service performed and to identify duplicated efforts, if any, by multiple clinic personnel. Case records should include classifications to describe the nature of the services provided. Suggested classifications include:

n Initial client interview;

n Research (identifying issues);

n Preparation of pleadings or other court documents;

n Preparation of letters (identifying the recipient and subject matter);

n Investigation of underlying facts (briefly describing the subject matter and information);

n Analysis of taxpayer or third-party records (identifying the records);

n Consultation with tax return preparer (identifying the preparer);

n Consultation or interview of third party (identifying the person); or

n Telephone conversations (identifying with whom the conversation was held and the subject matter).

When a claim for attorneys’ fees is submitted, the IRS makes an initial determination as to whether client records are sufficiently detailed, based on the facts and circumstances of each case. For additional guidance on the recovery of attorneys’ fees, see Rev. Proc. 2016-17, 2016-11 IRB 436.

Using a Professional Case Management System

Grant recipients are expected to use a case management system to assist with client eligibility screening and case assignment; help monitor the status of ongoing cases; input case notes; maintain accurate timekeeping records; track controversy outcomes; track case issues worked and where worked; and record educational, outreach, and advocacy activities for Interim and Year-End Reports. Information provided by LITCs is annually reported to Congress in

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Publication 5066, LITC Program Report, and may be included in the National Taxpayer Advocate’s Annual Report to Congress and other IRS publications and reports. The data can help identify trends or systemic issues. It is critical the information is complete and accurate. As case management software supports program activities, purchase of this type of software is an allowable cost under the LITC grant.

BEST PRACTICE

Consider using a cloud-based or remote-enabled case management system that will allow for remote access if needed. Explore enhancing the clinic’s case management system to the extent possible to capture information needed for progress reporting purposes (case issues worked, number of tax years involved, etc.) and timekeeping.

Backing Up Electronic Files Offsite

LITCs should have an offsite backup file system in place for information stored electronically to enable resumption of business if a disaster or other work stoppage occurs. Using grant funds to develop a backup file system supports program activities and is an allowable cost under the LITC grant. For additional suggestions on risk management, see www.irs.gov/businesses/small-businesses-self-employed/preparing-for-a-disaster-taxpayers-and-businesses and www.ready.gov/business.

Keeping Client Records in a Secure Location

Client records must be kept in a secure location ( e.g., a locking file cabinet or password-protected electronic files). Before clinic employees, volunteers, or students leave the office each day, they must make sure that taxpayer information is stored in a locked area. If it is necessary to take taxpayer information out of the office, it must always be safeguarded.

Data Breaches

LITCs must have procedures in place to respond to a breach of client information and must notify the LITC Program Office by contacting their assigned Advocacy Analyst if a breach occurs. The notification should be both in writing and by telephone and take place as soon as is practicable but not later than two business days from the time of discovery. See Section VI.D.i, Prevention and Response to Breach of Personally Identifiable Information.

Retaining Records That Document Compliance

Federal award recipients must maintain financial records and supporting documents to substantiate compliance with grant requirements. Generally, such records must be maintained for three years from the date of submission of the Year-End Report. See 2 CFR § 200.334 for exceptions.

Retaining Client Records

Client records must be retained for a minimum of three years but may need to be retained longer to comply with all applicable IRS, federal, and state record retention requirements. State bars and other professional licensing organizations may impose additional recordkeeping requirements for case files. All clinicians should know the record retention standards applicable to them and the clinic and take all steps necessary to ensure those standards are met.

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Asking for Client Suggestions

LITCs should seek comments from clients about the services received and ask for suggestions about how services might be improved. Many clinics routinely send surveys to clients at the conclusion of a case. It is important that when seeking suggestions, the information and data received is regularly compiled, reviewed, and considered as program policies, procedures, and services are assessed and changes are instituted. Comments that do not share any personally identifiable information may be helpful to include in grant applications and reports.

xii. Representing Low-Income Taxpayers

Qualified representatives, as defined in Section I.D, Key Terms and Definitions, must represent low-income taxpayers in controversies with the IRS. LITC grant funds must be used to support that representation. LITC grant funds may also be used to support representation in controversies with state or local tax authorities, if the LITC is representing the taxpayer in a related IRS controversy.

Intake

The intake process enables an LITC to determine whether it can represent a low-income taxpayer. During the intake process, LITC personnel collect information from the taxpayer to determine whether the taxpayer meets income and amount in controversy eligibility and to gather information about the tax problem. The intake process should involve a robust interview with the taxpayer, which can be conducted in person or by phone. If by phone, a toll-free line should be available for taxpayers as well as translation services as necessary.

LITCs should use an intake form, which can be paper or electronic, to capture the taxpayer’s information. Some clinics may ask taxpayers to complete the intake form independently before the interview, while others may meet with taxpayers to complete the form together. LITCs must record the taxpayer’s income information and that of the members of the taxpayer’s family unit, if applicable, on the intake form and solicit information so it promotes the development of trust between a qualified representative and applicant. If there is substantial reason to doubt the accuracy of the financial eligibility information provided by a potential client, the LITC must make appropriate inquiries to verify the information in a manner consistent with maintaining confidentiality of communications shared by the applicant. Any information disclosed during the intake process should be kept private and confidential.

If a taxpayer does not meet the LITC’s eligibility requirements, the LITC may not refer the taxpayer to a representative who charges a fee; instead, the LITC should inform the taxpayer about a state or local bar association, society of accountants or enrolled agents, or other tax professional organization that provides pro bono assistance. If the professional organization thereafter refers the taxpayer to a representative who charges a fee, the LITC has still made an appropriate referral.

BEST PRACTICE

Include an intake question about how the taxpayer learned about the clinic. This information can help determine the effectiveness of the clinic’s outreach efforts.

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Assisting Taxpayers Through Consultations

Many interactions a clinic will have with a taxpayer seeking assistance will be in the form of a consultation. A consultation is a discussion with a taxpayer designed to provide advice or counsel about a specific tax matter that does not result in representation of the taxpayer. An intake interview that does not result in the LITC representing the taxpayer may count as a consultation only if substantive advice or counsel is provided to the taxpayer about a specific tax matter. Merely referring the taxpayer to the IRS toll-free line or to a VITA site or tax return preparation service does not count as a consultation. For the Interim and Year-End Reports, consultations are counted and reported separately under the “Consultations” section on Form 13424-R.

Use an Engagement Letter When Opening a New Case

When an LITC representative makes the decision to open a case after speaking with a new client and reviewing the information on the intake form, the representative is strongly encouraged to document it using an engagement letter or retainer agreement, signed by the representative and the taxpayer. An engagement letter or retainer agreement defines the specific matters for which the LITC will provide representation and protects both the representative and the taxpayer by informing both parties as to the agreement of assigned responsibilities during the professional relationship. Clearly defining the scope of the representation protects both the representative and the taxpayer from potential misunderstandings about what assistance the representative will and will not provide, particularly if the taxpayer has additional legal issues unrelated to the tax controversy. Written copies of the engagement letter or retainer agreement signed by both the representative and the taxpayer should be retained by the LITC and the taxpayer.

LITCs must respect the attorney-client (or tax practitioner-client) relationship formed when an applicant comes in for a consultation. A representative must provide competent representation to a client, act with diligence and promptness regarding a client’s legal concerns, and keep a client informed of the proceedings in their case. A representative who fails to fulfill these duties may be subject to punitive actions from the organization responsible for issuing the representative’s license to practice.

Low-Income Taxpayers and the 90/250 Requirement

IRC § 7526(b)(1)(B)(i) requires that at least 90% of taxpayers represented by an LITC must have incomes that do not exceed 250% of the poverty level according to criteria established by the Director of OMB (as defined below). However, the Director of OMB has not established a poverty level or criteria. HHS publishes annual Federal Poverty Guidelines based on family unit size and geographic location, which are applicable to the LITC Program. See 91 Fed. Reg. 1797 (Jan. 15, 2026).

The 90/250 requirement applies only to taxpayers represented in controversy cases and does not apply to consultations or other LITC activities.

A determination that a taxpayer is low-income does not entitle a taxpayer to representation by the LITC. Rather, financial eligibility is a threshold question each LITC must analyze when determining whether to accept a case for representation. Whether to represent an otherwise eligible taxpayer with a controversy is a matter for an LITC to determine with reference to the needs of the taxpayer, the facts at issue, and the resources available to the LITC.

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LITC Income Guidelines

The LITC Program Office annually updates the income guidelines for the LITC Program in accordance with HHS’s annual publication of Federal Poverty Guidelines. Grant recipients must adopt new income guidelines within 30 days of the date of publication of the Federal Poverty Guidelines in the Federal Register (generally in late January). Based on the Federal Poverty Guidelines, the LITC income guidelines for controversy representation are shown in Figure 6.

Figure 6, LITC Income Eligibility Guidelines

Income Ceilings

Income for Purposes of the 90/250 Requirement

“Income” is defined in accordance with the definition used by the U.S. Bureau of the Census. See https://www.census.gov/topics/income-poverty/about.html for a more detailed discussion of items classified as income. Income includes total annual cash receipts before taxes, subject to certain exceptions. For example, income includes:

n Gross salaries before payroll deductions;

n Net earnings from self-employment (gross receipts less business expenses);

n Alimony;

n Child support;

n Federally-funded and other public assistance;

n Social Security;

n Pensions and retirement income;

n Unemployment benefits;

n Workers’ compensation;

n Rents;

n Royalties;

n Scholarships;

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n Dividends;

n Interest;

n Net gambling winnings; and

n Survivor benefits or annuity payments.

Income does not include:

n Proceeds received from the sale of property ( e.g., stocks, bonds, a house, a car);

n Withdrawals from a bank account;

n Tax refunds;

n Gifts;

n Loans;

n Lump sum inheritances;

n Insurance payments; and

n Noncash benefits ( e.g., employer-paid or union-paid portion(s) of employee fringe benefits).

Determining Annual Income

LITCs should generally determine program eligibility based on the taxpayer’s annual income at the time the taxpayer is seeking services. With seasonal workers or taxpayers whose financial situation has recently changed, the clinic may use a reasonable method to estimate the taxpayer’s income and then annualize that amount.

Example 1: Determining a Taxpayer’s Annual Income A taxpayer seeking representation was unemployed for a year but began working again three months ago at a full-time job. The clinic should calculate the taxpayer’s income for the immediately preceding three-month period and multiply by four to determine if the taxpayer meets the LITC income guidelines.

Example 2: Determining a Taxpayer’s Annual Income A taxpayer seeking assistance works seasonally for eight months each year and cares for family members during the remainder of the year. The taxpayer earns no other income. The clinic should use the amount earned over the eight-month period as the taxpayer’s annual income to determine if the taxpayer meets the LITC income guidelines.

Definition of Family Unit

For purposes of the 90/250 requirement, a family unit is generally defined as an unrelated individual or a family. An unrelated individual is a person 15 years old or over not living with persons related by birth, marriage, or adoption. A family is a group of two or more persons related by birth, marriage, civil union, or adoption who live together. However, if related individuals live together, but the person seeking assistance from the LITC is financially independent, then that person may be treated as a family unit, distinct from relatives in the household. If two unrelated individuals live together, they constitute two family units.

Subject to the general rules outlined above, LITCs have discretion on a case-by-case basis to include an unrelated individual as part of a family unit if that individual could be claimed as a dependent for federal tax purposes in the current year by the taxpayer or another member of the family unit. Clinics should exercise such discretion in a manner that is reasonable and consistent. Income of any person in a family unit must be included in the computation of the taxpayer’s income for purposes of applying the 90/250 requirement.

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Example: Determining the Size of a Family Unit A husband and wife come to the LITC seeking representation in a controversy with the IRS. The couple cares for two foster children who can be claimed as their dependents. The clinic may determine whether to treat the foster children as part of the family unit or as a separate family unit. However, if the foster children are treated as part of a single-family unit with the husband and wife, any state support payments received on behalf of the foster children must be included in the taxpayers’ income for purposes of applying the 90/250 requirement. If the foster children are treated as a separate family unit, the support payments would be excluded from the taxpayers’ income computation.

Applying the 90/250 Requirement to the Number of New Cases Opened

The 90/250 requirement applies only to taxpayers who the LITC has agreed to represent in controversy cases and does not apply to consultations or other LITC activities. LITCs apply the 90/250 requirement to the cases opened during the reporting period. Cases carried over from a prior grant year are not included in the calculation to determine compliance with the 90/250 requirement.

If the LITC agrees to represent the taxpayer and takes steps to begin resolving the controversy, including developing a plan for advocacy, the case is included in the total number of cases for purposes of meeting the 90/250 requirement. The case is counted in the total number of cases even if the taxpayer discontinues the relationship before advocacy occurs. Spouses represented with respect to a joint liability ( i.e., arising from a Married Filing Jointly return) are treated as a single case for purposes of applying the 90/250 requirement.

LITCs apply the 90/250 requirement by comparing the number of cases opened during the reporting period for a taxpayer whose income does not exceed 250% of the Federal Poverty Guidelines to the total number of cases opened during the reporting period. An LITC satisfies the 90/250 requirement if at least 90% of the cases opened during a reporting period are to provide representation to taxpayers whose incomes do not exceed 250% of the Federal Poverty Guidelines.

Example: Satisfying the 90/250 Requirement During the reporting period, the LITC opened 120 new representation cases and provided 92 consultations to taxpayers that did not develop into a case ( i.e., no representation agreement). The 90/250 requirement applies only to the 120 representation cases and does not apply to the 92 interactions with taxpayers that were consultations. Thus, at least 108 of the 120 cases (90%) where representation was provided must have been for taxpayers whose incomes did not exceed 250% of the applicable Federal Poverty Guidelines, based on the taxpayer’s geographic location and family size.

Developing Acceptance Criteria for Cases Where a Taxpayer’s Income Is Above 250% of Poverty

LITCs have discretion to choose when to represent a taxpayer whose income exceeds 250% of the Federal Poverty Guidelines, based on the taxpayer’s family unit size and location, provided that the number of such cases is no more than 10% of the new cases opened during the reporting period. The grant recipient must disclose the number of such cases on its Interim and Year-End Reports on Form 13424-R, Low Income Taxpayer Clinic (LITC) Reporting Form. The criteria used to select cases where the taxpayer’s income is in excess of 250% of the Federal Poverty Guidelines should be reasonable and consistent and support the overall goals of the LITC Program to provide representation, education, and advocacy to low-income and ESL taxpayers.

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Changes in a Taxpayer’s Financial Status

The determination of a taxpayer’s income for purpose of applying the 90/250 requirement is made at the time the clinic is determining whether to represent the taxpayer. A change in a taxpayer’s financial status during representation does not disqualify the taxpayer from continuing to receive clinic representation. The taxpayer’s failure to fully report their income at commencement of representation may be grounds for disqualification from representation or may require inclusion in the count of cases over 250%, depending upon the underlying circumstances. The LITC should examine the facts and document its decision and the factors leading to the decision of how to handle the situation.

Amount in Controversy Limit

The amount in controversy for any tax year generally should not exceed the amount specified in IRC § 7463 ($50,000). Thus, while most cases accepted by an LITC should involve amounts in controversy that do not exceed $50,000 in any tax year, LITCs may occasionally accept a case where the amount in controversy for a tax year exceeds the amount specified in IRC § 7463.

The amount in controversy is the amount in dispute, whether the taxpayer is disputing that they owe the amount ( e.g., challenging the validity of the underlying liability, seeking a refund), or whether the taxpayer acknowledges owing the amount and is merely trying to find a way to pay the amount in full or in part ( e.g., seeking a collection alternative). The amount in controversy is the amount of the tax liability for which the taxpayer is seeking assistance.

If the taxpayer is challenging the IRS’s actions ( e.g., alleging that the IRS’s collection action was unauthorized ( see IRC § 7433)) but is not disputing the amount owed, the amount in controversy is the amount which gave rise to the IRS’s actions which the taxpayer is challenging.

Example 1: Calculation of the Amount in Controversy – Lien Withdrawal The IRS filed a Notice of Federal Tax Lien under IRC § 6323 when Taxpayer A failed to pay a liability for Tax Year 1. Taxpayer A engages an LITC to represent him in obtaining a lien withdrawal under IRC § 6323(j). The withdrawal will remove the notice of federal tax lien filing from the public record.

When the LITC agrees to provide the representation, Taxpayer A owes $35,000 for Tax Year 1. Even though Taxpayer A is not challenging the amount due, the $35,000 balance is the amount in controversy because it is the amount associated with the IRS action for Tax Year 1 (lien filing) which Taxpayer A is challenging.

The amount reflected in a statutory notice of deficiency ( see IRC § 6212) or a notice of determination ( see IRC §§ 6320 and 6330) does not always reflect the amount in controversy for LITC eligibility. For example, the taxpayer may receive a notice of deficiency for $60,000, consisting of tax liability attributable to three different tax issues. If the taxpayer does not dispute one of the issues, the amount in dispute may be less than the $60,000 reflected in the notice of deficiency.

Example 2: Calculation of the Amount in Controversy – Notice of Deficiency Taxpayer B receives a notice of deficiency for Tax Year 1 showing additional tax due of $49,000 and associated penalties of $3,000. Taxpayer B disputes the entire penalty amount and $42,000 of the $49,000 tax due reflected in the notice of deficiency. The amount in controversy is $45,000 ($42,000 + $3,000).

Interest on the Amount in Controversy

Interest may be included in the calculation of the amount in controversy, depending on the nature of the controversy. For example, if the taxpayer disputes the validity of a tax liability and related penalties, the interest calculation is a percentage of the liability and will be established once the controversy is resolved administratively

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or in litigation. In that case, the LITC should exclude potential interest from the calculation of the amount in controversy. Where the taxpayer is seeking collection alternatives and not challenging the amount due, the amount in controversy will properly include tax, penalties, and interest.

Example 3: Calculation of the Amount in Controversy – Interest Taxpayer C files a request for interest abatement under IRC § 6404 for $12,000 in interest that had accrued with respect to tax due in Tax Year 1. The tax liability has been resolved. Only the interest is in dispute and is, therefore, included in the amount in controversy. The amount in controversy is $12,000.

Example 4: Calculation of the Amount in Controversy – Notice of Determination Under IRC § 6330 Taxpayer D receives a notice of determination under IRC § 6330 concerning a proposed levy action. The notice of determination reflects a $40,000 liability for Tax Year 1, a $30,000 liability for Tax Year 2, and a $20,000 liability for Tax Year 3. Each of the liability amounts represents tax, penalties, and interest. Although Taxpayer D is disputing the entire $90,000 liability ($40,000 + $30,000 + $20,000), each tax year is reviewed separately to determine the relevant amount in controversy. For Tax Year 1, the amount in controversy is $40,000; for Tax Year 2, the amount in controversy is $30,000; and for Tax Year 3, the amount in controversy is $20,000.

Example 5: Calculation of the Amount in Controversy – Balance Due Taxpayer E receives a bill (a notice and demand under IRC § 6303) from the IRS for $55,000 due for Tax Year 1. The amount due is comprised of $40,000 tax, $6,000 penalties, and $9,000 interest. Taxpayer D engages an LITC to represent him in submitting an offer in compromise (OIC) under IRC § 7122 for $4,000. The amount of the offer is not considered in determining the amount in controversy. Taxpayer D is trying to resolve the balance due, which includes interest. Therefore, the amount in controversy is $55,000.

In the refund context, the taxpayer is seeking to collect an overpayment. The amount of interest to which the taxpayer may be entitled under IRC § 6611 will be established once the controversy is resolved administratively or in litigation so interest is not included in the amount in controversy. The amount of interest is not being independently disputed, and the LITC should exclude potential interest from the calculation of the amount in controversy. In contrast, if the controversy involves a claim for refund of interest already paid, or the taxpayer disputes the amount of interest independently from the associated tax liability ( e.g., a claim for interest abatement or interest suspension under IRC § 6404), then the LITC should include potential interest in the calculation of the amount in controversy.

Example 6: Calculation of the Amount in Controversy – Refund Suit Taxpayer F filed a timely refund claim for Tax Year 1 for $12,000 plus any overpayment interest allowable under IRC § 6611. The IRS disallowed the refund claim. Taxpayer F engages an LITC to represent him in a refund suit in a U.S. district court. The interest is not independently disputed, as interest will be determined solely by the disposition of the taxpayer’s refund claim. Therefore, interest is not included in the amount in controversy of $12,000.

In a case involving collection or transferee liability where the payment of the balance due, including accrued interest is in dispute, the LITC should include interest paid in the calculation of the amount in controversy. If the dispute includes multiple quarters for a single tax year, the quarters for that single year should be totaled to calculate the amount in controversy for that year.

Example 7: Calculation of the Amount in Controversy – Multiple Tax Periods The IRS determined that Taxpayer G is a responsible person within the meaning of IRC § 6672 and imposed a penalty for an unpaid employment tax liability arising from Taxpayer G’s business for each of the four quarters in Tax Year 1. The liabilities for the penalty are as follows: $15,000 (quarter one), $18,000

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(quarter two), $10,000 (quarter three), and $12,000 (quarter four). The amount in controversy is $55,000 ($15,000 + $18,000 + $10,000 + $12,000) because the four quarters relate to a single tax year.

Representing a Taxpayer With More Than $50,000 in Controversy

A clinic may represent a taxpayer where the amount in controversy for a tax year exceeds $50,000. However, the grant recipient must disclose the number of such cases and explain why each case was accepted for representation on its Interim and Year-End Reports on Form 13424-R, LITC Program Report. A case only needs to be reported in the year it is opened. If a clinic intends to accept cases where the amount in controversy exceeds $50,000, the clinic must have a documented policy consistent with its organizational mission and is encouraged to take a facts and circumstances approach to decision-making. Factors an LITC may consider in its decision-making process may include:

n Whether the taxpayer has access to other representation if the LITC declines to take the case;

n Whether the LITC has particular language or cultural competencies that make it especially well-suited to

represent the taxpayer;

n Whether the issue in the case is of significance to the low-income or ESL taxpayer populations;

n Whether the issue in the case is novel;

n Whether there is a high likelihood that the amount in controversy is highly overstated; and

n Whether the case would provide educational value for student representatives.

If a clinic intends to accept cases above the $50,000 amount in controversy limit, it must formulate a policy and include the list of factors that will be considered in making the determination. The policy should also include who will make the determination, how it will be documented, and how exceptions will be tracked to ensure the information is available for reporting purposes.

Participation in the U.S. Tax Court Clinical Program

LITCs are strongly encouraged to participate in the U.S. Tax Court Clinical Program. Applying to participate in the program may be a condition of receiving an LITC grant award. Procedures for participation in the Clinical Program can be found at https://www.ustaxcourt.gov/clinics.html. Clinics will receive notification of acceptance into the program from the Clerk of the Court. There are two components to the program:

n The mailing “stuffer program;” and

n The calendar call program.

A clinic may participate in one or both components. Each component has its own rules for participation.

U.S. Tax Court Mailing Stuffer Program

Clinics approved to participate in the Clinical Program will draft a brief “stuffer notice” containing the clinic’s contact information and advising petitioners of the availability of LITC services. The notice is submitted to the Tax Court and included in court mailings to local petitioners who indicate they do not have representation. Sample notices with suggested language and format are available from the Tax Court.

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If there is more than one LITC that participates in the stuffer program for the Tax Court in a particular place of trial, the clinics must submit a joint stuffer to the Tax Court. Participating in the stuffer program is outreach and can help increase the number of Tax Court petitioners reached by the clinic. Reaching petitioners earlier in the litigation process may help facilitate a much earlier resolution to their tax issues.

U.S. Tax Court Calendar Calls

Clinics participating in the Clinical Program may also attend U.S. Tax Court calendar call sessions. Generally, Tax Court calendar calls are held one to two times per year in each city where the Tax Court hears cases, although they can occur more frequently depending on local need. When the Tax Court grants a taxpayer’s petition for a hearing, the Tax Court sends a notice of trial to each petitioner scheduled for that day and to the IRS Commissioner (respondent), approximately five months in advance of the calendar call. To efficiently handle cases, the Tax Court typically schedules many hearings on the first day of a calendar call session. On the first day of the scheduled week, each party is “called” before the judge to set hearings and trials and schedule the court’s “calendar” for the week. Thus, it is known as a “calendar call.” Some Tax Court hearings are resolved in a matter of minutes while others take longer.

If a clinic identifies a taxpayer eligible for LITC representation, the clinic can choose whether to limit assistance to an informal consultation about the tax issues, offer brief service including negotiating informally with IRS counsel, or enter an appearance (limited or full scope) and represent the taxpayer before the Tax Court. See Section I.D, Key Terms and Definitions, Qualified Representative.

U.S. Tax Court Pre-Trial Settlement Days

The LITC Program Office, members of the IRS Office of Chief Counsel, Appeals, Collection, the American Bar Association Section of Taxation, LITCs, and the U.S. Tax Court continue to work together to create opportunities to bring together IRS Counsel, LITC attorneys and pro bono attorneys, and taxpayers in advance of calendar calls to negotiate settlement of pending cases. TAS employees also participate in Settlement Days to assist taxpayers with tax issues attributable to non-docketed years. Local Taxpayer Advocates and their staff can work with and inform taxpayers about how TAS may assist with other unresolved tax matters or to provide further assistance after the Tax Court matter is concluded. If a taxpayer experiences difficulties concerning a collection matter, TAS can also assist with collection alternatives. Clinics can learn about such opportunities and work to help set up Pre-Trial Settlement Days by contacting their local Chief Counsel office.

Limited Entry of Appearance

To improve efficiency and to encourage the assistance of unrepresented taxpayers, the U.S. Tax Court allows practitioners to enter a Limited Entry of Appearance. Limited representation means that the legal services provided are limited in scope and duration to less than full representation. Under Tax Court Rule 201(a), Tax Court Administrative Order No. 2020-03, and ABA Model Rule 1.2(c), an individual admitted to practice and in good standing with the Tax Court may file a limited appearance to a date or dates during a scheduled Trial Session. An LITC practitioner enters an appearance by signing the Tax Court petition (or other initial pleading) or by filing an Entry of Appearance or Substitution of Counsel. See U.S. Tax Court Rule 24. For more information about limited entry of appearance, see the FAQs at www.ustaxcourt.gov/resources/practitioner/lea_faq.pdf.

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Representation by Students and Law Graduates

Practice by students and law graduates before courts and local tax agencies is governed by the procedural rules of the court or agency with jurisdiction over the matter. Clinics should be familiar with and follow the rules of those jurisdictions.

Eligibility for Special Appearance Authorization for Students and Law Graduates

Practice before the IRS under a special appearance authorization issued by the Director of the LITC Program is limited to students and law graduates at an LITC or student tax clinic program working under the direct supervision of an individual authorized to practice before the IRS. See Delegation Order 25-18 (Rev. 5), IRM 1.2.2.15.18 (June 30, 2023). A student is an individual enrolled in an accredited law, business, or accounting program. A qualified law graduate is an individual who graduated from law school in 2022 or later and has not yet been admitted to the bar of any state, territory, or possession of the United States, including a Commonwealth or the District of Columbia. An individual who has applied to sit for the bar but has not been allowed to sit due to character, fitness, or moral qualifications does not meet the definition of a qualified law graduate. Similarly, an individual who has been denied admission to a bar due to character, fitness, or moral qualifications does not meet this definition of a qualified law graduate.

LITCs may apply for a special appearance authorization using Form 13424-P, Application for Special Appearance Authorization, and Form 13424-Q, LITC or STCP Student and Law Graduate Information Chart, and faxing them to the LITC Program Office at 877-477-3520. For more detailed instructions and copies of forms, please refer to the LITC Toolkit website.

Submitting Form 2848 With Student/Law Graduate Representatives

For a student or law graduate to represent a taxpayer before the IRS, the taxpayer must sign Form 2848, Power of Attorney and Declaration of Representative, listing the student or law graduate and the supervisory representative. Any Form 2848 submitted to the IRS that lists a student or law graduate as a representative must include a special appearance authorization letter issued by the Director of the LITC Program or the IRS will not process the Form 2848. Clinics submitting authorizations that include a student or law graduate representative should check the LITC Toolkit for special submission instructions. LITCs may also submit these authorizations online indicating the form is for an LITC.

Special Appearance Authorizations Automatically Expire

The authority of the supervisory representative on Form 2848 submitted to the IRS will remain effective until the form is withdrawn or revoked. However, the authority of any students or law graduates listed on Form 2848 to represent the taxpayer automatically expires 130 days from the day the taxpayer signs the form.

Clinics should avoid contacting the IRS to withdraw any student or law graduate as a taxpayer’s representative unless doing so is necessary to protect the interests of the taxpayer. A notice submitted to the IRS withdrawing a student or law graduate as a representative may result in the IRS inadvertently removing all representatives listed on the relevant Form 2848, including the supervisory representative.

Substituting a Representative

The supervisory representative has the authority to assign and reassign student or law graduate representatives to the taxpayer’s case without requiring the taxpayer to sign a new Form 2848 for each substitution, provided the taxpayer checks the box on line five of Form 2848 delegating authority to the representative to substitute or add

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representatives. Each time a student or law graduate representative is substituted for an existing client, the clinic should submit to the IRS a copy of the original Form 2848 signed by the taxpayer (with box 5 checked) along with a new Form 2848 listing the substituted representative(s). The new Form 2848 listing the substituted representative does not require the taxpayer’s signature but should be signed and dated by the supervisory representative. If a student or law graduate is being substituted, the authority of the student or law graduate previously listed on Form 2848 terminates. The authority of a student or law graduate added or substituted will expire 130 days from when they were added/substituted by the supervisory representative, not 130 days from the date the Form 2848 was originally signed by the taxpayer.

If an LITC encounters difficulty with the processing or recognition of Forms 2848 accompanied by a special appearance authorization, please email the LITCProgramOfce@irs.gov or call 202-317-4700.

Conflicts of Interest and Student Representatives

ABA Model Rule 1.7 provides that a lawyer should not represent a client if the representation involves a concurrent conflict of interest. Students and law graduates authorized to practice before the IRS are treated as lawyers when analyzing ethics issues. Thus, students and law graduates who plan to seek employment with the IRS while participating in an LITC should be wary of potential conflicts of interest. A student or law graduate has an obligation to inform clients that they are seeking employment with the IRS. Clients may give informed consent, confirmed in writing, to have the student or law graduate continue the representation. If a client does not consent to the student or law graduate continuing the representation, the student or law graduate must withdraw the employment application, or the Clinic Director must assign the case to an individual who does not have a conflict of interest.

xiii. Education

In addition to representing low-income taxpayers in disputes with the IRS, LITCs are required to educate low-income and ESL taxpayers about their taxpayer rights and responsibilities. Educational activities must be offered directly to low-income and ESL taxpayers, and clinics can expand their reach by educating staff of other organizations that assist the low-income or ESL taxpayer populations that the clinic is targeting for education purposes. Providing taxpayer education to low-income and ESL taxpayers serves multiple purposes, including:

n Informing taxpayers about the TBOR, including the right to retain representation ;

n Helping taxpayers to understand their taxpayer rights and obligations and empowering them to exercise

their rights;

n Informing taxpayers about their eligibility for tax credits such as the Earned Income Tax Credit (EITC);

n Publicizing the clinic and its services; and

n Generating controversy representation cases.

Education topics should address tax issues of general significance to low-income and ESL taxpayers or of relevance in the local community, such as:

n Tax recordkeeping;

n Filing requirements and due dates;

n Eligibility for various deductions and credits;

n Worker classification;

n Identity theft;

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n Innocent spouse relief;

n IRS audit and appeals process; and

n Collection alternatives.

Educational activities may be offered in a variety of formats; however, LITCs are encouraged to offer in-person educational activities when possible. Using virtual formats for delivering educational activities is encouraged, especially where in-person is not possible. These virtual activities may be counted as educational activities under “Educational Activities” on Form 13424-R so long as there is a reliable way to count the number of participants and the presenter and participants can interact so questions can be asked and answered. Clinics are encouraged to work with trusted community partner organizations to reach the taxpayer communities with which they are trying to connect. Examples of educational activities include but are not limited to:

n Making a presentation about federal taxpayer rights and responsibilities to an ESL class at a local

community college;

n Presenting a workshop on collection alternatives, identity theft, or worker classification at a public library in a

community where a significant portion of the residents are low-income or ESL;

n Holding a class for low-income workers about how to properly complete a Form W-4 for income tax

withholding;

n Leading a weekly discussion series at a community center where a significant portion of the residents are

low-income or ESL on topics such as choosing a competent tax return preparer, determining filing status, and claiming credits such as the Child Tax Credit and the EITC; and

n Presenting a webinar with a live two-way webchat component about identity theft and recent tax scams for

taxpayers in remote locations.

Clinics may also offer education to staff and volunteers of community groups or organizations to help them make referrals, spot tax issues, and pass along information. These presentations may also be counted and used to meet the clinic’s Tax Education goals.

Training may also be offered to professional organizations as a tool to recruit local qualified representatives to join the clinic’s pro bono panel. As mentioned previously, trainings provided to tax professionals are reported separately under “Clinic Information” on Form 13424-R.

Educational Materials

LITCs are responsible for creating, printing, and distributing the materials used to educate taxpayers. Materials should be accessible to ESL taxpayers considering their needs. Some educational resources are shared on the LITC Toolkit. The TAS website (www.taxpayeradvocate.irs.gov) also has sample materials on a variety of tax-related topics. The QTE is responsible for reviewing all educational materials for accuracy before distribution, whether they are prepared by the clinic or adapted from another organization or clinic’s materials.

BEST PRACTICE

When asked, many clinics will share their educational materials and will allow other clinics to adapt the materials for their use. Collaboration among LITCs helps all clinics to use their resources most effectively by enabling them to concentrate on creating new materials on select topics or new areas.

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xiv. Advocacy

The third prong of the LITC mission is to identify and advocate for issues that impact low-income and ESL taxpayers. LITCs may achieve this goal through a variety of methods including but not limited to:

n Participating in advocacy projects with professional organizations;

n Responding to public requests for comments to IRS regulations, procedures, or guidance;

n Preparing and filing an amicus brief to alert a court about the concerns of low-income or ESL taxpayers;

n Authoring articles in scholarly journals or general interest publications on topics impacting low-income or ESL

taxpayers;

n Appearing on television or radio to raise awareness about tax issues that affect low-income or ESL taxpayers;

n Producing public service announcements; and

n Submitting issues to the Systemic Advocacy Management System (SAMS), available through the IRS website

at www.irs.gov/Advocate/Systemic-Advocacy-Management-System-SAMS.

Report these activities under “Advocacy” on Form 13424-R. Grant recipients must ensure that advocacy efforts do not rise to the level of certain lobbying actions that are prohibited as a use of federal grant funds. See Section VI.D.iii, Lobbying Restrictions.

xv. Preparing Tax Returns and Individual Taxpayer Identification Number

Applications

Generally, if low-income taxpayers require assistance with tax return preparation or an application for an ITIN, they should be referred to the VITA program, a Tax Counseling for the Elderly (TCE) site, or another free tax return preparation service. Some IRS TACs will accept ITIN applications and verify taxpayer documents, but they will not prepare tax returns. For a list of TACs that provide in-person document review, see www.irs.gov/help/tac-locations-where-in-person-document-verifcation-is-provided. Note that TAC offices are open on an appointment-only basis; appointments can be scheduled by calling 844-545-5640. LITC grant funds cannot be used to fund return preparation and related activities, such as those performed by VITA or TCE programs.

An LITC can help with a federal tax return, a claim for refund, or an ITIN application if such assistance is necessary to resolve a dispute with the IRS or is ancillary to the LITC’s ESL education activity. The clinic may not charge a fee (even if it is a nominal fee) for preparing a tax return or a claim for refund. An LITC or an individual associated with an LITC that does not charge a fee is specifically excluded from the definition of a “Tax Return Preparer” as set forth in Treas. Reg. § 301.7701-15(f), for purposes of preparer penalties, and is not required to obtain a preparer tax identification number.

Clinics are prohibited from including tax return, claim for refund, or ITIN application preparation among a list of services provided in any advertising materials. See Section VI.C.iv, Developing a Community Outreach Plan, for more information.

Example 1: Permissible Tax Return Preparation – Controversy Resolution LITC Q is representing Taxpayer E regarding an OIC under IRC § 7122. Taxpayer E must file all tax returns she is legally required to file before the IRS will process an OIC request. Taxpayer E has not filed returns for the last three tax years. Because filing the delinquent tax returns is necessary to have the OIC considered and to resolve the controversy, LITC Q may assist Taxpayer E in completing her tax returns for the last three tax years.

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Example 2: Impermissible Tax Return Preparation – No Tax Controversy Assume the same facts as in Example 1, except the OIC is accepted by the IRS. As a condition of the IRS’s acceptance of the offer, Taxpayer E must timely file returns for the five-year period beginning with the date of acceptance of the offer. LITC Q cannot assist Taxpayer E in completing and filing her returns due after the offer is accepted because the timely filing of future tax returns is not a tax controversy.

Example 3: Permissible Tax Return Preparation – Controversy Resolution Assume the same facts as Example 2, except Taxpayer E fails to file a return required to be filed during the five-year period beginning with the date of acceptance of the OIC and the IRS defaults the offer. Taxpayer E engages LITC Q to represent her in trying to get the offer reinstated. LITC Q may assist Taxpayer E in completing the delinquent return because reinstatement into the OIC program is a controversy matter and filing the return is necessary to resolve the controversy.

Example 4: Permissible Tax Return Preparation – Ancillary to ESL Education LITC R is conducting a program to inform taxpayers about required recordkeeping for tax return filing purposes. LITC R did not advertise return preparation as a service available to taxpayers who attend the educational event. Nonetheless, at the end of the event, one of the attendees, Taxpayer F, asks an employee of LITC R to “look” at her self-prepared tax return before she files it to determine if it is correct. The employee of LITC R looks at the return and identifies several errors. The employee of LITC R may assist Taxpayer F in correcting the return because the assistance offered to Taxpayer F is ancillary to ESL education and outreach.

Example 5: Impermissible Tax Return Preparation – Not Ancillary to ESL Education LITC S holds a monthly workshop about EITC. At the end of each workshop, LITC S’s personnel offer to prepare a tax return for attendees eligible to claim the EITC. LITC S may not prepare tax returns under these circumstances because attendees have not indicated there is a controversy for which the returns are required to resolve, and the routine offering of such service does not qualify as ancillary. It is improper to make this offer at the end of each workshop.