In 2019, 20,259 taxpayers used Low-Income Tax Clinics (LITC), where they received help to get $6.8 million in refunds from the IRS. The clinics also decreased or corrected around $50 million in tax liabilities. Finally, over 41,000 taxpayers and service providers sought and received educational services from a LITC.
All this is to say that Low-Income Taxpayer Clinics are a boon to those eligible to receive their services.
What is a LITC, and who can use one? Find out below. This post also contains information about the IRS grant program that funds these clinics.
Defining a Low-Income Taxpayer Clinic - LITC
The term “low-income taxpayer clinic” is a formal designation for an organization that receives matching grants from the IRS to represent individuals in low-income tax brackets handle disputes with the IRS.
Each clinic performs outreach and educational services, especially for those who speak English as a second language (ESL). LITCs provide representation before the agency or in court for people under audit, help with appeals, consultations on tax collection matters, and other tax issues.
If low-income taxpayers have problems with the IRS, whether they have received a notice or need account problems corrected, a LITC can represent and assist them.
LITCs are often run by:
- Accounting schools
- Law schools
- Legal services offices
- Nonprofit organizations providing community tax education programs in ESL communities
Some, but not most, may provide free tax preparation services. LITCs receive partial funding from the IRS, but their employees, volunteers, and the clinics themselves are entirely independent of the IRS and the Taxpayer Advocate Service (TAS).
The LITC Community
The LITC community is comprised of independent taxpayer clinics that collaborate on various activities, such as:
Clinics network to shape strategies and projects to help specific groups of taxpayers.
The clinics also provide information about taxpayer rights and responsibilities, translated into multiple languages to help those for whom English is not their native language to maintain compliance with U.S. tax laws and help them understand its workings.
These clinics participate in the LITC program to ensure all low-income and ESL taxpayers experience a fair tax system run with integrity. Most clinics charge a small fee or offer educational and other services for free, except for tax preparation.
Who Is Eligible to Use a LITC?
Each clinic independently determines if you meet income guidelines and other criteria before they agree to represent you. You only qualify if your income is below 250% of the current year’s federal poverty guidelines and the amount in dispute per tax year is less than $50,000.
For the 2021 calendar year, 250% of federal poverty guidelines for the 48 contiguous states, Puerto Rico, and Washington, D.C. by family size is:
- $33,975 for a family of 1
- $45,775 for a family of 2
- $69,375 for a family of 4
- $92,975 for a family of 8
- An additional $11,800 for each family member over 8
The limits for Alaska and Hawaii are typically $6,000 to $9,000 higher annually.
You can take advantage of LITC services in the following situations:
- You have been denied an Earned Income Tax Credit (EITC) or a Child Tax Credit (CTC) claim and want to appeal the decision.
- You owe back taxes and require help negotiating a payment plan with the IRS to pay off your debt.
- You received notice from the IRS that says your EITC or CTC claim contains errors, and the agency demands repayment.
- You have not received proper wage documentation from an employer.
The IRS rarely denies EITC or CTC claims outright. Typically, the agency requests further documentation to support your claim. However, it still may deny your claim and keep you from claiming the credit in the future.
A LITC can help you understand any notices or letters you may receive from the IRS and assist in gathering the appropriate paperwork such notices might require. It's essential to respond to notices within a specific period, or the IRS may collect additional taxes on top of what you already owe.
Sometimes, IRS denials of claims are not accurate. Having representation on your side can help you avoid problems associated with the IRS, which relieves a great deal of stress for low-income taxpayers.
In some instances, the IRS may even require repayment of previously issued refunds and add penalties for late compliance. Anytime you receive a letter from the IRS, open it immediately and deal with it. If you have trouble understanding any part of it, visit your local Low-income Taxpayer Clinic as soon as possible. Take note of any dates, so you don’t miss any deadlines.
Would Your Taxpayer Clinic Like to Receive a Grant for the Next Tax Year?
While the deadline for applying for 2022 has passed, the dates should be similar for 2023 applicants. In 2022, the application period ran from May 3, 2021, to June 18, 2021. Look for next year’s window to open soon. The IRS will likely announce the period in early May.
You can access the 2020 LITC Program Report here.
Do You Require Services from a LITC?
To find a Low-Income Taxpayer Clinic near you, visit the Low-income Taxpayer Clinic site. The website contain information about locations and contact information for LITCs along with the languages each clinic offers services in.
Another handy publication can be found here or you can call the IRS toll-free at 800-TAX-FORM (800-829-3676).
The IRS has a tendency to look big and scary to most taxpayers who receive mail from the agency. But help is available. If you meet the income guidelines or speak English as a second language, a Low-income Taxpayer Clinic is nearby, ready to assist you with anything you need.
For further information, you can always contact Top Tax Defenders. We’re here to help you take care of any tax problem, no matter how small.