VIII. AWARD MODIFICATION, SUSPENSION, TERMINATION, OR WITHDRAWAL

The LITC Program Office’s duty to enforce grant recipient compliance as a condition of funding is essential to the administration of the program. The LITC Program Office may become aware of clinics’ non-compliance through reviews of clinic reports, site assistance visits, or other interactions with grant recipients. If the clinic fails to meet its obligations under the terms and conditions of the grant, the LITC Program Office may reduce an award amount, delay release of funds, or suspend or terminate a grant in whole or in part. Prior to taking such steps, the IRS will determine whether additional conditions might remedy the non-compliance. A grant award may also be terminated with the grant recipient’s consent, in which case the parties must agree upon the termination conditions, including the effective date, and in the case of partial termination, the portion to be terminated. Even if a multiyear grant has been awarded under IRC § 7526(c)(3), the IRS may terminate a grant during the multiyear period.

Actions that may lead to a reduced award, delay in receiving grant funds, suspension, or termination include:

n Failure to comply with federal tax and nontax obligations, or the applicant does not have an active SAM

registration or is suspended or debarred;

n Failure to satisfy the 90/250 requirement of IRC § 7526(b)(1)(B)(i);

n Failure to provide matching funds on a dollar-for-dollar basis for all LITC grant funds awarded;

n A violation by the grant recipient of a material provision of IRC § 7526 or other applicable law or regulation

(including the Uniform Guidance);

n A violation by the grant recipient of a material provision of the Publication 3319, LITC Grant Application

Package and Guidelines (for example, failure to timely file complete and accurate reports);

n Failure to maintain taxpayer information in a secure manner; and

n Failure to provide accurate and competent representation to taxpayers, where competent representation

requires the legal knowledge, skill, thoroughness, and preparation reasonably necessary to provide effective assistance. See ABA Model Rule 1.1, Competence, and Model Rule 1.3, Diligence.

NOTE: Under 2 CFR § 200.340, the LITC Program Office can terminate federal awards, to the greatest extent authorized by law, when the federal award no longer effectuates the program goals.

Remedies for Noncompliance

If a grant recipient violates the federal statutes, regulations, or the terms and conditions in the Notice Award, the LITC Program Office may impose additional conditions, as described in 2 CFR § 200.208. If the LITC Program Office determines that noncompliance cannot be remedied by imposing additional conditions, the LITC Program Office may take one or more of the following actions, as appropriate in the circumstances:

n Temporarily restrict access to grant funds pending correction of the noncompliance or more severe

enforcement action;

n Disallow all or part of certain cost items, including grant expenditures and matching funds, that support the

activity or action not in compliance and seek recovery of improperly spent funds (plus any interest);

n Wholly or partly suspend or terminate the grant;

n Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180;

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Award Modification, Suspension, Termination, Or Withdrawal

n Withhold a future award amount; or

n Take other remedies that may be legally available.

Notification of Grant Suspension or Termination

Suspension or termination of a grant award will be handled in accordance with the Uniform Guidance. The LITC Program Office will notify the grant recipient in writing of any suspension or termination action, setting forth the reasons for such action and the effective date. The notification will advise the grant recipient of its right to object to the suspension or termination action by providing information and documentation in writing to challenge the basis for the action.

Challenging a Suspension or Termination

If a grant recipient wishes to challenge the LITC Program Office’s decision to suspend or terminate a grant, it must send a written request to the Director of the LITC Program for reconsideration of the suspension or termination decision. The grant recipient may provide information and documentation for review during the reconsideration. The Director of the LITC Program will review the submission and make a recommendation to the National Taxpayer Advocate, who has final decision making authority, unless recused. In recusal situations, a final decision will be made by the Deputy National Taxpayer Advocate.

IRC § 7526 does not require the IRS to provide grant recipients an opportunity for a hearing or an appeal. Therefore, the necessity for renegotiation, suspension, or termination of a grant agreement will be determined solely by the IRS. The decision of the National Taxpayer Advocate (or the Deputy National Taxpayer Advocate in recusal situations) when an LITC challenges the LITC Program Office’s decision is final.

Responsibilities Following Termination or Withdrawal

If the LITC Program Office terminates a grant, the grant recipient must submit a final Year-End Report to the LITC Program Office within 90 days of the termination. Similarly, if clinic activity is terminated prior to the expiration of the period of the grant agreement or if a grant recipient withdraws from the LITC Program, a final Year-End report must be submitted within 90 days of final clinic activity or withdrawal from the LITC Program.

All unused funds must be repaid to the IRS within 30 days of the date of withdrawal or the date of termination. The federal government is generally obligated to charge interest on any amount not repaid promptly. See 31 CFR § 901.9. Thus, for any funds the LITC Program Office requests to be returned to the IRS, failure to repay those funds on time may result in the grant recipient having to pay interest on those funds.

Employees and volunteers of the clinic who are lawyers must adhere to their responsibilities as attorneys, not just the responsibilities within the parameters of the LITC Program. The ABA has Model Rules of Professional Conduct that are applicable when a lawyer is terminating representation. ABA Model Rule 1.16 provides that upon terminating representation of a client, a lawyer must take reasonable steps to protect a client’s interests, which includes giving notice to the client, allowing the client time to find other representation, and returning papers and property to the client. The state bar may have a similar rule of professional responsibility that provides guidance for terminating representation. Courts, such as the U.S. Tax Court, require the filing of a motion for leave to withdraw as counsel. See U.S. Tax Court Rule 24. In addition, if the clinic will no longer participate in the U.S. Tax Court Clinical Program (including the Calendar Calls), the clinic must notify the Tax Court so it will cease referring taxpayers to that clinic.

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Use of “LITC” After Discontinuation of Services

Once an organization is no longer a grant recipient, the clinic must not use “LITC” as part of its name. Circular 230 prohibits practitioners from providing misleading or deceptive statements or claims. See 31 CFR § 10.30(A) (1). If the organization will continue to exist but will not receive grant funds, it may be misleading for the organization to call itself an LITC. Further, use of the LITC logo or LITC designation may lead to civil/criminal penalties or imprisonment. See 31 U.S.C. § 333. In appropriate circumstances, the LITC Program Office may need to refer the matter to the IRS Office of Professional Responsibility and/or the Treasury Inspector General for Tax Administration.

Paperwork Reduction Act Notice

The application package and guidance document with its associated forms provide information to TAS to issue grants under its LITC Grant program. LITC uses this information to evaluate grant proposals, determine eligibility for grants, and monitor grant recipients for progress. Books or records relating to a form or its instructions must be retained as long as their content may become material in the administration of any Internal Revenue law. Providing this information is required to obtain or retain the government benefit and is authorized by 26 U.S.C. 7526. The estimated burden associated with this collection of information ranges from 30 minutes up to five hours, averaging 2.5 hours per response. Generally, tax returns and return information are confidential, as required by IRC § 6103.

Under the Paperwork Reduction Act, an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by the Office of Management and Budget (OMB). The valid OMB control number for this information collection is 1545-1648. Comments concerning the accuracy of this burden estimate and suggestions for reducing this burden should be directed to the Internal Revenue Service, Taxpayer Advocate Service, LITC Program Office, TA:LITC, 1111 Constitution Ave., NW, Washington, DC 20224. Do not send grant application forms to this address. You must submit grant applications through the LITC Grant Portal.

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Federal Grant Acronyms