Low Income Taxpayer Clinic“The hardest thing in the world to understand is the income tax.”

–Albert Einstein

Cal PolyCal Poly

Taxpayer Advocate ServiceLITC Program Mission Statement

Low Income Taxpayer Clinics ensure the fairness and integrity of the tax system by:

educating low income taxpayers about their rights and responsibilities,

providing pro bono representation to taxpayers in tax disputes with the IRS,

conducting outreach and education to taxpayers who speak English as a second language, and

identifying and advocating for issues that impact low income taxpayers.

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VITA, TCE and LITC Tax Services Continuum

Education Compliance Controversy

Cal Poly LITC (Ed. & Outreach to ESL Community)

VITA/TCE Programs

Cal Poly LITC

VITA/TCE Programs(Education)

Cal Poly LITC (delinquent returns

only)

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Cal Poly LITC

In 2009 the IRS Taxpayer Advocate Service authorized Cal Poly to operate a low income taxpayer clinic beginning in 2010.

Service Area– San Luis Obispo County– Northern Santa Barbara County– Monterey County

Clinic receives funding from IRS but is independent. Taxpayer’s decision to use the Clinic will not

affect taxpayer’s rights before IRS.

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Cal Poly LITC Staffing

Lisa Sperow, Attorney, Clinic Director Eddy M. Quijano, Attorney Graduate Tax Students Undergraduate Tax Students

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Clinic’s Guidelinesfor Representation

Low Income Taxpayers in San Luis Obispo, Monterey and Santa Barbara Counties

Conditions to Clinic Representation:– Taxpayer’s income does not exceed 250% of the

Federal Poverty Guidelines– Within service area– Controversy with the IRS– Not more than $50,000 in dispute -exceptions)

*otherwise consultations

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2013 Income Qualification Guidelines

Size of Family

Income Ceiling (250% of Federal Poverty Guidelines)

1 $28,725

2 $38,775

3 $48,825

4 $58,875

5 $68,925

6 $78,975

7 $89,025

8 $99,075

Each additional

 $10,050

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Tax Controversy Services–Generally

Handle taxpayer’s federal tax audit, collection, administrative, or judicial appeal matters

Assist non-filer to prepare delinquent tax returns Assist victim of identify theft on federal tax

matter Represent taxpayer in California tax controversy

but only when representing TP in federal tax controversy

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Examples of Clinic Controversy Services

Tax Audit– Cancellation of Indebtedness Income– Earned Income Credit– Estimated Tax Penalty

IRS Collection Matter– Seek “Currently Not Collectible” Status– Installment Agreement; Offer in Compromise– Request Collection Due Process Hearing (e.g.,

levy, lien) Innocent Spouse Relief

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Tax Education and Consulting Services

Educate ESL taxpayers about their federal taxpayer rights and responsibilities.

Discussions and workshops within the community covering a range of tax topics. Examples include:– Filing requirements– Clinic services

ITINs EITCDependency exemptionsIdentify theft, etc.Audits, collection matters, etc.*able to give presentations in English too

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IRS “Dirty Dozen” 2013

Identity Theft- 2,400 enforcement actions against ID thieves – Jan. alone there were 734 enforcement actions including 298 indictments/informations/complaints & arrests – avg sentences: 4-20 years in jail – IRS prevented $20 in 2012/$14 billion in 2011

*IRS has 3,000 employees working on issue Phishing – note the IRS will never initiate contact

with taxpayers via email

IRS “Dirty Dozen” 2013

Return Preparer Fraud – 60% of taxpayers use return preparers – choose carefully!

Hiding Income Off-Shore – IRS works with DOJ to track down those who use off-shore banks, brokerage accounts, nominee entities etc.. To evade paying taxes.

“Free Money” Tax Scams- scammers prey on low-income, poorly educated (church ex.)

IRS “Dirty Dozen” 2013

Impersonation of Charitable Organizations – occurs in the wake of natural disasters, use names that sound like charities, IRS.gov has a search feature you can use “Select Check: to find out if it’s a recognized charity – don’t give out financial information

False/Inflated Income and Expenses – trying to get the EITC

Dirty Dozen cont….

False Form 1099 – don’t fall prey to people who tell you to claim income you didn’t earn – filing fake returns

Frivolous arguments – don’t make outlandish claims

Falsely claiming zero wages Disguised Corporate ownership Misuse of trusts

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Questions?

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