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Low-Income Tax Clinics: Pushing Through the Pandemic

Posted on Dec. 21, 2020

Disputes between taxpayers, whether individuals or businesses, and a state revenue agency or the IRS have given rise to a robust industry of tax professionals. But considering a professional’s hourly rates and the number of hours they might spend resolving a taxpayer’s case, many cannot afford this assistance. And the language and education factors that often come into play only compound the challenges of obtaining professional assistance. Taxpayers are under a legal duty to comply with the tax laws, but when problems arise between a taxpayer and a revenue agency, is every taxpayer able to obtain the professional help they need?

Low-income taxpayers are sorely underserved. Enter low-income taxpayer clinics. Staff attorneys in LITCs are experts in tax matters and provide free assistance to taxpayers whose incomes are no more than 250 percent of the federal poverty level guidelines. Some clinics charge modest fees, either fixed or on a sliding scale, for taxpayers whose income exceeds the poverty threshold but is not high enough to match a tax professional in the general sector. According to the IRS’s 2020 list of LITCs, there are only 143 clinics nationwide.1 Of the 200 or so law schools in the country, only 40 to 45 sponsor tax clinics. The remainder are generally nonprofit tax clinics such as the Community Tax Law Project and clinics such as Legal Aid that operate within a larger organization providing legal services to low-income people. Some state and local bar associations have also founded tax clinics.

Generally, LITCs do not prepare tax returns but provide legal services for taxpayers with problems such as audits, appeals, and collections. Other services may include helping taxpayers substantiate legitimate claims for tax benefits, including custodial taxpayers claiming dependent children on a return, issues relating to retirement and disability, and correcting erroneous wage and income reports. Clinics that receive funding from the IRS cannot provide assistance with state tax issues unless the issues are connected to the federal tax issues,2 but a clinic awarded an IRS grant may assist low-income taxpayers with state tax problems if it receives funding from a separate source. Although most clinics focus on individual taxpayers, some assist small businesses such as independent contractors. In addition to providing legal services, clinics engage in community outreach, educating taxpayers on their responsibilities and their rights when contacted by a tax agency.

Coping With the Pandemic

Like it has done to many other organizations of all kinds, public and private, the COVID-19 pandemic has had a significant impact on how tax clinics deliver their services to low-income taxpayers. And although they are slowed by the pandemic, the wheels of tax administration continue to turn, and the clinics’ work cannot stop. Thus, when possible, they have found alternate ways to deliver their services. I spoke with the directors and attorneys for three tax clinics serving low-income taxpayers in the District of Columbia, New Hampshire, and Virginia to learn how they have managed to continue providing their services despite the difficulties the pandemic has wrought.

Desperate Times, Creative Measures

David Sams is the executive director of the nonprofit The Community Tax Law Project (CTLP) in Richmond, Virginia. The CTLP was founded in 1992 by Nina E. Olson, a former national taxpayer advocate. Sams, who previously volunteered his services to a tax clinic in Florida, came to the CTLP as a volunteer, and was asked to fill in as a staff attorney for another attorney who was going on leave. He stayed on as a staff attorney, and when the clinic’s directorship became vacant, he was offered the position.

The CTLP’s funding comes from many sources. Unlike academic-sponsored tax clinics that receive major support from the universities to which they are attached, the nonprofit CTLP is not eligible for this support. Instead, it receives IRS grants, matched chiefly through the value of pro bono work by attorneys and accountants. Funding is also provided by the Virginia State Bar Association, private foundations, and corporate giving, usually by large law firms.

David Sams
David Sams

The CTLP also runs annual fundraising appeals and receives individual donations from those efforts. The various funding sources help the CTLP offer a wider range of tax assistance than some clinics — state or federal. The terms of the IRS grant require the funds to be used only for federal taxpayer issues. But because it receives separate grants from Virginia and other sources, the CTLP can help taxpayers with state tax issues on a stand-alone basis.

“We have a large number of callers [and] for almost all, there is a very high level of anxiety. We have seen demeanors that run the gamut, from confused to terrified. We receive a noticeable number of callers who think they may have to go to jail because they can’t pay their taxes,” Sams said. The CTLP staff works to reassure their clients through empathy: “We listen to the client’s side of what they’re experiencing and reassure them that we’re on their side and will help them as much as possible. We also take care not to give clients the impression that we are judging them personally, as many callers are embarrassed by their current situation, especially those who are elderly. Once we’ve heard the client’s story, we explain the steps they can expect in working with our office and try to keep the legalese out of the conversation as much as possible. Sometimes an intake can take multiple phone calls if the client is very upset. If so, we calmly ask them if they need to take a break and set up a time for a follow-up call. Usually, after the first interaction, our callers are very relieved hearing that there is a solution to their problem and someone is able to help them.” Once a case is resolved, many clients express their relief about the services they’ve received, Sams said, adding that “it’s not uncommon to hear responses like ‘I can sleep at night again’ or ‘It was like a weight was lifted off my shoulders.’”

The pandemic has not hindered the CTLP in delivering its services. “CTLP has always taken the approach that we try to work with the taxpayers, to meet them with whatever technology level they need. Because we’re really a statewide organization, we still rely mainly on the phone. Through the pandemic we’ve never closed down our phone lines. The only thing we’ve really changed is how they provide us documents. We’ve always relied primarily on the mail, but now that our office is closed, clients can’t deliver documents personally the way they used to do. However, they can come to the office and drop their papers through our mail slot. Clients can also deliver documents by fax or scanning,” Sams explained. The only real problem is with clients who use resources such as the public library to get documents to the CTLP, he said, while adding that still “people have gotten very good at using their phones, taking photos of documents and sending them through a free email account like Gmail. We thought we’d really have a problem [after the pandemic began] but that hasn’t been the case.”

Community outreach is one of the CTLP’s core missions. “We have an extensive education and community outreach program; we normally hold over 200 events per year,” Sams said. The pandemic initially slowed the clinic down regarding these events, but not for long. “We’ve reached out to our community partners, and now those [events] are right back up; we just do them virtually,” he explained. Yet there are struggles when dealing with clients who don’t have access to virtual technology, so they’ve had to be creative. For example, Sams explained the CTLP’s use of radio stations and Facebook groups in the Latino community: “We appear regularly on radio shows, providing up-to-date information on the stimulus package, and various other issues, and we also do this on Facebook Live. We’ve also held live education events at farms, for farmworkers with H2-A visas, where one farmworker will hold up a smartphone and we’ll hold an education event for the farmworkers with tax questions, right there in the fields.” He noted that the CTLP has reached more taxpayers through its outreach program because of events held on Facebook Live, saying that “before, I could give a talk for 20 or 30 people, but now I can reach hundreds through livestreaming.” Given the success of remote communications technology in supporting the clinic’s work, Sams plans to continue this more cost-effective means of communication by holding education and other events virtually rather than having someone drive out to a community for an in-person event. He did caution that the CTLP does not intend to rely exclusively on virtual communications in the future and will resume in-person events “as soon as it’s safe to do so.”

Resilience Despite the Odds and Inequities

Professor Jacqueline Lainez Flanagan directs the tax clinic at the University of the District of Columbia David A. Clarke School of Law. Her tax clinic career started at the Chicago Low-Income Taxpayer Clinic, where she volunteered shortly after graduating from law school. Before graduating, she participated in the Midwest Low-Income Tax Clinic, a program of the Center for Economic Progress. In addition to directing the clinic, she teaches introductory coursework on federal income taxation and contracts. Lainez says that student participation in the university’s clinical program varies from three to eight students per year. The clinic focuses on clients with federal tax problems, but it also works with the District of Columbia Office of Tax and Revenue if taxpayers have issues related to the federal tax.

Many of the clinic’s clients are taxpayers it has worked with, on and off, for years, Lainez explains, adding that many experience ongoing hardship: “They’ve tried to pay the IRS, with

Jacqueline Lainez
Jacqueline Lainez Flanagan

some taking drastic measures like shutting off certain utilities to meet a proposed IRS payment plan. Most common are situations where we’ve previously assisted someone in resolving an outlier tax debt for a year or a cluster of years, [and] they may reach out with a different tax matter, or in a case where the original issue has resurfaced. Naturally, it triggers a degree of alarm.” Despite the risks, clients have been willing to brave the pandemic’s dangers to get an urgent matter resolved. Lainez recounted an instance earlier this year of an “elderly former client who physically showed up at our office, [which is closed to the public], with an updated collection notice in hand. This person is in a high-risk category, so protecting their health was our primary concern. Our rotating, in-office staff did a wonderful job of collecting their documents, locating me, and in short order I was able to contact the IRS to confirm this person’s ongoing, ‘currently not collectible’ status.” Lainez says this example generally characterizes the clinic’s former and existing clients, adding that “they have [shown] resilience, despite [the] many odds and systemic inequities. They prioritize their tax issues and, in many cases, [to resolve that issue they] are willing to take the risk of an in-person meeting.”

Are there differences in the types of issues taxpayers have brought to the clinic since the pandemic began? “Yes and no,” Lainez says. Rather than different issues, she explains, “there’s an added layer to the issues taxpayers are presenting. A preexisting client from ‘the before times’ may have presented solely with a collection matter. Now they are still presenting with a collection matter, or a pending U.S. Tax Court liability suit, but they may also be dealing with issues surrounding the economic impact payment. This is all compounded by reduced IRS operations and the strain of additional economic hardship.”

And although “the clinic has received fewer taxpayer inquiries since the pandemic began, it’s difficult to [tell if] the [reduced numbers are] related to the overall decline of collection activity due to the IRS campus closures during the peak of the March lockdown,” Lainez says. “It was announced that collection activity would essentially cease, and the automatic collection systems functions would suspend the generation of notices of federal tax liens, automated levies, etc. Taxpayers resumed calling when they began receiving these notices after the collection system started up again. In some instances, they received several notices at once, presumably due to the backlog created by the pandemic,” she added.

The pandemic has had a dramatic impact on the clinic’s operations, Lainez says. “It has completely changed the way we render services. Many of our clients are elderly, infirm, or both, so we have always relied on telephone communications as needed. Now, for everyone’s protection, we are operating in a completely remote environment. This has presented important ethical considerations, in terms of protecting communications, preserving confidentiality, and navigating representation in a space where the digital divide is stark. We have to meet clients where they are in terms of technological prowess, access to secure technology, and, more often, the lack thereof. We’ve had to rely largely on the U.S. mail.”

Community outreach is a vital component of every tax clinic’s services — indeed, for recipients of IRS grants like Lainez’s clinic it’s required — but the pandemic has brought Lainez’s outreach efforts to a halt. “At the moment, we’re concentrating on developing secure and effective methods to communicate with clients and revenue departments, so we have not conducted in-person outreach. We have, however, talked to community partners about holding virtual events and have rendered technical advice to community organizations helping district residents with the The Coronavirus Aid, Relief, and Economic Security Act stimulus payments, and especially to immigrant taxpayers trying to navigate this space with its myriad barriers.”

While operating virtually has its advantages, Lainez says that “after this, hopefully once-in-a-lifetime, global pandemic,” she does not foresee that “the delivery of the clinic’s services will be so concentrated in a virtual space. [But] I can see taking advantage of technology to engage in broader community outreach and education, especially with communities outside the metro D.C. area, where there is a greater need that isn’t currently being met.”

Off the Radar

Barbara Heggie is the coordinator and staff attorney for the New Hampshire Pro Bono Low-Income Taxpayer Project. Like the CTLP, the clinic is not sponsored by a university or legal aid organization; it’s sponsored by the New Hampshire Bar Association. The clinic is a project of the bar association’s New Hampshire pro bono referral program. About 80 percent of the clinic’s expenses are covered by the IRS grant program, and “the remaining costs are mostly met from non-federal grants, such as the [New Hampshire] Supreme Court Library Pro Hac Vice grant, the [New Hampshire] Bar Foundation’s Interest on

Lawyer’s Trust Account grant, Granite State United Way, and a grant from Washington state,” she explained. These non-federal funds provide a quarter of the dollar-for-dollar matching funds required by the IRS program, with the “remaining three-quarters [coming] from the value of donated time [which the IRS program permits]; that is, time spent by the tax clinic’s volunteers, who are recruited by the bar association’s pro bono referral program,” Heggie said, adding that the donated time “helps New Hampshire tax attorneys and accountants to meet their pro bono service goals for people lacking the means to pay a tax professional. At the same time, the most vulnerable among us can get quality representation in their federal tax problems.”

Despite the pandemic, Heggie’s work with clients is almost business as usual. Although “the pandemic has made it harder to deliver taxpayer services in some instances, it isn’t impossible. It hasn’t resulted in a dramatic change for the clinic,” she said. While the clinic’s physical location is closed to in-person consultations, and Heggie hasn’t been able to meet with clients for several months, New Hampshire is a rural state with few options for public transportation. Before the pandemic, it was rare for her to have client meetings more than once per month: “The telephone and the mail are my primary means of communication, but many of my clients use email, as well. Some have access to a fax line or WhatsApp, and occasionally I meet with clients via video chat.” She has arranged for a couple of masked, socially distant document handoffs as well, but the major change has been with “snail mail” communications: “Because I’m

Barbara Heggie
Barbara Heggie

working from home most of the week, I’ve set up a temporary post office box in the town where I live, and I’ve directed my clients to use that address instead of my Concord[, New Hampshire,] address,” Heggie said.

Unfortunately, Heggie’s clinic has not made community outreach efforts for the past several months “because we’ve been swamped with COVID-related cases from people seeking help with their stimulus payments.” However, she’s looking to work with her “community partners to try some virtual teaching.” The clinic is seeing fewer of the types of cases they normally handle. Before the pandemic, most cases involved collections for taxpayers who “are strong candidates for low-dollar [less that $100] offers in compromise. [Earned income tax credit] cases [were] also common, as [were] schedule C audits for small proprietors. Innocent spouse cases come up frequently, too.” Taxpayers seeking the clinic’s help are usually in a state of mental distress, discernible even though Heggie and the client are not face to face: “You can hear the emotion in a phone call. There’s fear in the voice — and bewilderment and exhaustion. Each day, I’m reminded that, to the layperson, an IRS notice is not written in standard English; it’s in old high gobbledygook, and these clients are in desperate need of a translator. This is why the most common response from my clients at the end of a case is: ‘Now I can finally sleep at night!’”

Finally, Heggie says that while low-income taxpayer services are always needed, they’re needed more than ever now: “The low-income community [has been] hit hardest by the disaster, and this one is deep and long. Moreover, it’s proven to be hardest for the poorest to receive their stimulus payments. People with nothing are often off the IRS radar, [and] they’re often unable to access or make use of the technology the IRS has set up to help people help themselves.”

Pushing Forward

LITCs perform a vital service to taxpayers who cannot otherwise afford tax help and generally are those most in need of assistance. The difficulties these taxpayers face may result from a poor understanding of the tax laws or a language barrier. Unfortunately, there are few clinics nationwide and most are concentrated in urban areas, meaning that low-income taxpayers in many rural areas are likely unable to get the help they need. For those taxpayers in locales where help is available, the pandemic has curtailed — in some cases, severely — the clinics’ ability to render services because the physical location is closed. Clinics must explore other avenues to reach taxpayers, mainly by using advanced communications technology, such as virtual conferencing, to stay in touch with clients. Some clinics are using email and fax, which, while utile, could present significant confidentiality issues. Community outreach has suffered, but clinics are tapping into the power of social media, radio broadcasting, and other means to further their educational missions. It’s heartening to know that despite the hardships, LITCs are pushing forward to help our most vulnerable taxpayers.

FOOTNOTES

1 IRS Pub. 4134 (2020). Note that the list includes only tax clinics that receive annual funding grants from the IRS.

2 IRS funding grants for tax clinics, up to $100,000 annually, stipulate that the clinics’ focus must be on federal taxpayer issues.

END FOOTNOTES

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