Low Income Taxpayer Clinic Cal Poly “The hardest thing in the world to understand is the income tax.” –Albert Einstein
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.
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.
Cal Poly LITC Staffing • Lisa Sperow, Attorney, Clinic Director • Eddy M. Quijano, Attorney • Graduate Tax Students • Undergraduate Tax Students
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
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
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
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 • EITC • Dependency exemptions • Identify theft, etc. • Audits, collection matters, etc. *able to give presentations in English too
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