2018 Pub 3319.pdf

LITC LOW INCOME

TAXPAYER CLINICS

Representation • Education • Advocacy

2018 Grant Application Package and Guidelines iLOW INCOME TAXPAYER CLINIC

TABLE OF CONTENTS

MAY 2017

DEAR PROSPECTIVE LOW INCOME TAXPAYER CLINIC GRANT APPLICANT:

I am pleased to announce the opening of the 2018 Low Income Taxpayer Clinic (LITC) grant application period, which runs from May 1 through June 20, 2017.

The LITC program provides matching grants of up to $100,000 per year to qualifying organizations to represent low income taxpayers in disputes with the IRS and to educate persons who speak English as a second language (ESL) about their rights and responsibilities as U.S. taxpayers. LITC services must be provided for free or for no more than a nominal fee. If you would like to know more about the activities and accomplishments of organizations that have been awarded LITC funding in prior years, see

Publication 5066, LITC Program Report.

This publication outlines eligibility requirements for Low Income Taxpayer Clinic matching grants authorized under Internal Revenue Code (IRC) § 7526 and instructions about how to apply for a matching grant. This publication contains information about:

nn Basic eligibility requirements;

nn Standards of operation;

nn Compliance requirements;

nn Application and selection process;

nn Post-award requirements;

nn LITC Program Office responsibilities;

nn Application forms and instructions; and nn Reporting forms and instructions.

This publication, including the Appendix section, should be retained for future reference by all LITC grant recipients.

The IRS remains committed to achieving maximum access to representation for low income taxpayers under the terms of this grant program. Thus, in awarding 2018 LITC grants, we will continue to work toward the following program goals:

nn Ensuring that each state (plus the District of Columbia and Puerto Rico) has at least one clinic;

nn Expanding coverage in areas identified as underserved; and nn Ensuring that grant recipients demonstrate that they are serving geographic areas that have sizable populations eligible for and requiring LITC services.

The IRS may award grants to qualifying organizations to fund one-year to three-year project periods.

Low Income Taxpayer Clinics (LITCs) ensure the fairness and integrity of the tax system for taxpayers who are low income or speak

English as a second language (ESL) by:

Providing pro bono representation on their behalf in tax disputes with the IRS;

Educating them about their rights and responsibilities as taxpayers; and

Identifying and advocating for issues that impact low income taxpayers.

To be considered for 2018 LITC Program grant funding, all applications and continuation requests must be submitted electronically by June 20, 2017, via www.grants.gov or www.grantsolutions.gov, respectively.

The cost of preparing and submitting an application or continuation request is the responsibility of each applicant.

The LITC Program Office will notify each applicant in November 2017 about whether it was selected to receive a matching grant for 2018.

If you have questions about the LITC Program or grant application process, please contact the LITC

Program Office at 202-317-4700 (not a toll-free call) or by email at LITCProgramOffice@irs.gov.

I appreciate your interest in the LITC Program and look forward to working with the 2018 Low Income

Taxpayer Clinic grantees to ensure the fairness and integrity of federal tax administration.

Sincerely, Nina E. Olson

National Taxpayer Advocate

Paperwork Reduction Act Notice:

This application package is provided for awards under the Low Income Taxpayer Clinic Grant Program. The information is requested from the applicants in order to determine their eligibility for an LITC grant and evaluate their grant proposals. Applicants are not required to respond to this collection of information unless it displays a currently valid OMB number. The estimated average burden associated with this collection of information is 60 hours per respondent for program sponsors and 2 hours for student and program participants. Comments concerning the accuracy of this burden estimate and suggestions for reducing this burden should be directed to the IRS, Tax Forms and Publication Division, 1111 Constitution Ave. NW, Room, Washington, DC 20224. Do not send grant application forms to this address. Grant applications must be submitted through www.grants.gov and continuation requests must be submitted through www.grantsolutions.gov. Comments about this application package should be sent to: Internal Revenue Service, Taxpayer Advocate Service, LITC Program Office, TA: LITC, Room 1034, 1111 Constitution Ave., NW, Washington, DC 20224.

Catalog of Federal Domestic Assistance Number: 21.008 OMB Approval No.1545-1648 http://www.grants.gov http://www.grantsolutions.gov mailto:LITCProgramOffice@irs.gov http://www.grants.gov http://www.grantsolutions.gov iiiLOW INCOME TAXPAYER CLINIC

RESOURCES

IMPORTANT DATES FOR 2018 LITC GRANTEES

Application period May 1 – June 20, 2017

Program Office review and evaluation June – October 2017

Notification of selection/non-selection November 2017

LITC Grantee Conference Early December 2017

Grant year January 1, 2018 – December 31, 2018

Interim report due July 30, 2018

Year-End report due April 1, 2019

CONTACTING THE PROGRAM OFFICE

Potential applicants may direct questions concerning the LITC Program or the application process to the LITC

Program Office. Organizations that have been awarded an LITC grant should contact their assigned Advocacy

Analyst directly with any questions regarding reporting or program requirements.

Hours of Operation: 8:00 a.m. – 4:30 p.m. (EST), Monday – Friday

Phone: 202-317-4700

Fax: 877-477-3520

Email: LITCProgramOffice@irs.gov

Address: Internal Revenue Service

LITC Program Office

Attention: TA: LITC, Room 1034

1111 Constitution Ave., NW

Washington, DC 20224

GENERAL INFORMATION

www.taxpayeradvocate.irs.gov/Tax-Professionals/Low-Income-Taxpayer-Clinics

INCOME GUIDELINES TO DETERMINE ELIGIBILITY FOR LITC SERVICES

www.irs.gov/Advocate/Low-Income-Taxpayer-Clinics/Low-Income-Taxpayer-Clinic-Income-Eligibility-Guidelines

LITC TOOLKIT

www.litctoolkit.com (Access restricted to current LITC grantees)

QUESTIONS RELATING TO SPECIAL APPEARANCE AUTHORIZATION FOR

STUDENT AND LAW GRADUATE PRACTICE

Phone: 212-298-2295

Fax: 212-298-2079 mailto:LITCProgramOffice@irs.gov http://www.taxpayeradvocate.irs.gov/Tax-Professionals/Low-Income-Taxpayer-Clinics http://www.irs.gov/Advocate/Low-Income-Taxpayer-Clinics/Low-Income-Taxpayer-Clinic-Income-Eligibility-Guidelines http://www.litctoolkit.com

LITC PROGRAM PUBLICATIONS

Publication 3319, Low Income Taxpayer Clinic (LITC) Grant Application Package and Guidelines https://www.irs.gov/pub/irs-pdf/p3319.pdf

Publication 4134, Low Income Taxpayer Clinic List http://core.publish.no.irs.gov/pubs/pdf/p4134--2017-01-00.pdf

Publication 5066, Low Income Taxpayer Clinic (LITC) Program Report http://core.publish.no.irs.gov/pubs/pdf/p5066--2017-01-00.pdf

OTHER USEFUL RESOURCES

Dun and Bradstreet Data Universal Numbering System (DUNS)

Website: fedgov.dnb.com/webform

Support: 866-705-5711

Email: govt@dnb.com

System for Award Management (SAM)

Website: www.sam.gov

Support: 866-606-8220

Submission of a Grant Application via Grants.gov

Website: www.grants.gov

Support: 800-518-4726

Email: Support@grants.gov

Submission of a Continuation Request and Interim/Year-End Reports via Grantsolutions.gov

Website: www.grantsolutions.gov

Email: Beard.William@irs.gov

Department of Health and Human Services (HHS) Payment Management System

Website: www.dpm.psc.gov

Support: 877-614-5533

Email: PMSSupport@psc.gov

Civil Rights Protection

Website: https://www.irs.gov/uac/your-civil-rights-are-protected

2 CFR Part 200 (OMB Guidance) and 2 CFR Part 1000 (Treasury Department Adoption of OMB Guidance)

Website: www.ecfr.gov

Taxpayer Advocate Service Taxpayer Toolkit

Website: www.TaxpayerAdvocate.irs.gov

United States Tax Court

Website: www.ustaxcourt.gov http://fedgov.dnb.com/webform mailto:govt@dnb.com http://www.sam.gov http://www.grants.gov mailto:Support@grants.gov http://www.grantsolutions.gov mailto:Beard.William@irs.gov http://www.dpm.psc.gov mailto:PMSSupport@psc.gov http://www.ecfr.gov http://www.TaxpayerAdvocate.irs.gov http://www.ustaxcourt.gov https://www.irs.gov/uac/your-civil-rights-are-protected https://www.irs.gov/pub/irs-pdf/p3319.pdf http://core.publish.no.irs.gov/pubs/pdf/p4134--2017-01-00.pdf http://core.publish.no.irs.gov/pubs/pdf/p5066--2017-01-00.pdf vLOW INCOME TAXPAYER CLINIC

TABLE OF CONTENTS

The organization of this publication represents a progression of the LITC grant process and administration including the following information:

I. LITC PROGRAM OVERVIEW

A. History of the LITC Program

B. Types of Grants Awarded by the LITC Program Office

C. Core Terms and Definitions

II. GRANT RECIPIENT ELIGIBILITY

A. Subgrants are Prohibited

B. Requirements for Providing LITC Services

C. Start-Up Expenses may be Paid Using LITC Grant Funds

D. Compliance with Federal Tax and Federal Nontax Obligations

E. Civil Rights Reviews

F. Other Assurances and Certifications

III. HOW TO APPLY FOR AN LITC GRANT

A. Application Process

B. Completion and Submission of the LITC Grant Application Package

C. Completion and Submission of a Non-Compete Continuation Request

D. Eligible LITC Grant Applications

E. Notice of Award

IV. STANDARDS FOR OPERATING A LOW INCOME TAXPAYER CLINIC

A. Staffing

B. Infrastructure and Resources

C. Developing a Community Plan

D. Publicizing LITC Services

E. Building Community Partnerships

F. Networking With Other Clinics

G. Mentoring and Technical Assistance

H. Maintaining Client Confidentiality

I. Volunteers

J. Recordkeeping and File Management

V. STANDARDS FOR PROVIDING TAXPAYER SERVICES

A. Representation

B. Education

C. Advocacy

D. Preparing Tax Returns and ITIN Applications

VI. COMPLIANCE REQUIREMENTS

A. Uniform Administrative Requirements

B. Civil Rights Protection Responsibilities

C. Lobbying Restrictions

D. Spending LITC Grant Funds and Matching Funds

E. Meeting the Matching Funds Requirement

VII. POST-AWARD REQUIREMENTS OF GRANTEES

A. Events Requiring Notification to the LITC Program Office

B. Managing Grant Funds

C. Reporting Responsibilities

VIII. LITC PROGRAM OFFICE RESPONSIBILITIES

A. Structure

B. Administration

C. Assistance

D. Oversight

E. Sight Assistance Visits

F. Suspension or Termination of a Grant

G. Grant Close Out

APPENDIX A: INFORMATION FORMS FOR LITC GRANT APPLICATIONS AND

CONTINUATION REQUESTS

APPENDIX B: BUDGET FORMS FOR LITC GRANT APPLICATIONS AND

CONTINUATION REQUESTS

APPENDIX C: FORMS FOR REPORTING LITC GRANTEE ACTIVITIES

COMMONLY USED ACRONYMS

GLOSSARY

INDEX

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I. LITC PROGRAM OVERVIEW

A. HISTORY OF THE LITC PROGRAM

As part of the Internal Revenue Service Restructuring and Reform Act of 1998 (RRA 98), Congress enacted IRC § 7526 to authorize funding for the LITC grant program. Subject to the availability of appropriated funds, the IRS may award grants of up to $100,000 per year to qualifying organizations for the development, expansion, or continuation of an LITC.

The program is designed to protect taxpayers’ rights by providing access to representation for low income taxpayers, so that achieving a correct outcome in an IRS dispute does not depend on the taxpayer’s ability to pay for representation. Many low income taxpayers are also individuals for whom English is a second language (ESL taxpayers). Consequently, Congress authorized funding for organizations to provide outreach and education about taxpayer rights and responsibilities to ESL taxpayers in addition to representing low income taxpayers in controversies with the IRS.

In June 2014, the IRS adopted the Taxpayer Bill of Rights — a set of ten fundamental rights that taxpayers should be aware of when dealing with the IRS.1 One of those ten rights is the right to retain representation, which gives taxpayers the right to retain an authorized representative of their choice to represent them in their interactions with the IRS. In addition, taxpayers have the right to be informed that if they cannot afford to hire a representative, they may be eligible for assistance from an LITC. In December 2015, Congress enacted IRC § 7803(a)(3), which requires the Commissioner to ensure that employees of the IRS are familiar with and act in accord with taxpayer rights, including the right to retain representation.2

The IRS created the LITC Program Office in 1999 to provide guidance, assistance, and oversight to LITC grantees and prospective applicants. The LITC Program Office is part of the Office of the Taxpayer Advocate (commonly referred to as the Taxpayer Advocate Service (TAS)).

Figure 1, States With at Least One LITC Grantee, 1999 and 2016

States with at Least One LITC Grantee – 1999 States with at Least One LITC Grantee – 2016

1 See IR-2014-72 (June 10, 2014).

2 See Consolidated Appropriations Act, 2016, Public Law 114-113, Division Q, § 401, 129 Stat. 2242, 3117 (Dec. 18, 2015).

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In 1999, the IRS awarded grants totaling less than $1.5 million to 34 entities located in 18 states and the District of Columbia. In 2016, the IRS awarded over $11.4 million in grants to 138 entities located in 49 states and the District of Columbia.

Representation, Education, and Advocacy Are the Primary Functions of LITCs The text of IRC § 7526 is reprinted in full below:

Section 7526. Low-income taxpayer clinics.

(a) In general. The Secretary may, subject to the availability of appropriated funds, make grants to provide matching funds for the development, expansion, or continuation of qualified low-income taxpayer clinics.

(b) Definitions. For purposes of this section—

(1) Qualified low-income taxpayer clinic.

(A) In general. The term “qualified low-income taxpayer clinic” means a clinic that—

(i) does not charge more than a nominal fee for its services (except for reimbursement of actual costs incurred); and

(ii) (I) represents low-income taxpayers in controversies with the Internal Revenue Service; or

(II) operates programs to inform individuals for whom English is a second language about their rights and responsibilities under this title.

(B) Representation of low-income taxpayers. A clinic meets the requirements of subparagraph (A)(ii)(I) if—

(i) at least 90 percent of the taxpayers represented by the clinic have incomes which do not exceed 250 percent of the poverty level, as determined in accordance with criteria established by the Director of the Office of Management and Budget; and

(ii) the amount in controversy for any taxable year generally does not exceed the amount specified in section 7463.

(2) Clinic. The term “clinic” includes—

(A) a clinical program at an accredited law, business, or accounting school in which students represent low-income taxpayers in controversies arising under this title; and

(B) an organization described in section 501(c) and exempt from tax under section 501(a) which satisfies the requirements of paragraph (1) through representation of taxpayers or referral of taxpayers to qualified representatives.

(3) Qualified representative. The term “qualified representative” means any individual (whether or not an attorney) who is authorized to practice before the Internal Revenue Service or the applicable court.

(c) Special rules and limitations.

(1) Aggregate limitation. Unless otherwise provided by specific appropriation, the Secretary shall not allocate more than $6,000,000 per year (exclusive of costs of administering the program) to grants under this section.

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(2) Limitation on annual grants to a clinic. The aggregate amount of grants which may be made under this section to a clinic for a year shall not exceed $100,000.

(3) Multi-year grants. Upon application of a qualified low-income taxpayer clinic, the Secretary is authorized to award a multi-year grant not to exceed 3 years.

(4) Criteria for awards. In determining whether to make a grant under this section, the Secretary shall consider—

(A) the numbers of taxpayers who will be served by the clinic, including the number of taxpayers in the geographical area for whom English is a second language;

(B) the existence of other low-income taxpayer clinics serving the same population;

(C) the quality of the program offered by the low-income taxpayer clinic, including the qualifications of its administrators and qualified representatives, and its record, if any, in providing service to low-income taxpayers; and

(D) alternative funding sources available to the clinic, including amounts received from other grants and contributions, and the endowment and resources of the institution sponsoring the clinic.

(5) Requirement of matching funds. A low-income taxpayer clinic must provide matching funds on a dollar-for-dollar basis for all grants provided under this section. Matching funds may include—

(A) the salary (including fringe benefits) of individuals performing services for the clinic; and

(B) the cost of equipment used in the clinic.

Indirect expenses, including general overhead of the institution sponsoring the clinic, shall not be counted as matching funds.

B. TYPES OF GRANTS AWARDED BY THE LITC PROGRAM OFFICE

A grant may be awarded for up to a three-year period. However, funding is provided for one-year periods

(January 1 – December 31), subject to the availability of annually appropriated funds. First-time applicants may request a one year grant. Multi-year grants will only be awarded to applicants that have successfully completed at least one year under the terms of the LITC grant.

New applicants and current grantees whose single year or multi-year grant period will end on December 31, 2017, must submit an application. A recipient of an LITC grant entering the second or third year of a multi-year grant in 2018 must submit a Non-Compete Continuation (NCC) request, in lieu of an application. See Section III, How to Apply for an LITC Grant.

With respect to multi-year grant awards, the second and third years will be funded subject to satisfactory performance, compliance with the conditions outlined in the notice of award, and availability of appropriated funds. All grant funds awarded must be used for the program specifically authorized in the notice of award.

Figure 2 explains how the LITC Grant Program receives its funding.

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Figure 2, How the LITC Program Receives Its FundingHow the LITC Program Receives Its Funding

Step One

Step Two

Step Three

Step Four

OMB coordinates with federal agencies to formulate the President’s Budget, which covers all federal agencies, including the IRS, and reflects the President’s priorities and vision for the country. Federal law requires that the President submit a budget proposal to Congress every February, which serves as a starting point for negotiations in Congress.

Congressional appropriations committees consider the President’s Budget as they prepare appropriations legislation for the upcoming fiscal year, which begins on October 1.

The appropriations committees submit legislative proposals which are brought to the floor for consideration by the House of Representatives and the Senate. Once the House and the Senate consider the proposals and reconcile them, Congress passes a unified omnibus budget and sends the legislation to the President to be signed into law.

The President signs the appropriations bill into law, making funds available to executive agencies, including the

IRS.

C. CORE TERMS AND DEFINITIONS

Amount in controversy means the amount in dispute for each tax year for which the LITC is representing the taxpayer. Often the amount in controversy is the amount owed or the refund requested that is in dispute. In some disputes with the IRS, however, the amount in controversy is the amount associated with an action taken by the IRS. The amount includes the tax liability in dispute for a tax year, plus any related penalties imposed.

Whether interest is included in the amount in controversy will depend on the nature of the controversy. Further, the amount in controversy is limited to the amount in dispute, which may be less than the amount specified in a statutory notice of deficiency. If the taxpayer is disputing the amount due in more than one tax year or period, the amount in controversy is the amount in dispute for a single tax year. For additional rules with regard to calculating the amount in controversy, see Section V. A, Representation.

Clinic means an organization receiving a grant pursuant to IRC § 7526 that represents low income taxpayers in controversies with the IRS and that operates a program to educate individuals for whom English is a second language about their rights and responsibilities under the Internal Revenue Code. Examples of a clinic include:

nn A clinical program at an accredited law, business or accounting school in which students represent low income taxpayers in controversies arising under the Internal Revenue Code; and nn An organization described in IRC § 501(c) and exempt from tax under IRC § 501(a) in which employees and volunteers represent low income taxpayers in controversies with the IRS.

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Consultation means a discussion with a taxpayer designed to provide advice or counsel about a specific tax matter that does not result in representation of the taxpayer.

Controversy means a dispute arising under the Internal Revenue Code between an individual and the IRS concerning the determination, collection, or refund of any tax, penalties, or interest under the Internal Revenue Code, and includes any proceeding brought by the taxpayer under Title 26. A controversy includes a dispute related to the tax provisions of the Affordable Care Act and certain civil actions arising under the Internal Revenue Code, for example those arising under IRC §§ 7431–7435. While representing a taxpayer in a controversy with the IRS, an LITC may also need to represent the taxpayer in a controversy with a state or local tax agency concerning the same or related tax matter. A controversy does not include a federal criminal tax matter, but may include a state criminal matter. For example, in some instances, the controversy may be considered a civil matter in the federal context, but a criminal matter under state or local law. If the LITC is already representing the taxpayer in the federal civil matter, it may be appropriate for the LITC to continue the representation to resolve the state or local matter.

Educational activities are programs designed to inform ESL or low income taxpayers about their rights and responsibilities as taxpayers, as well as tax issues of particular significance to the intended audience. Educational activities may also be conducted for other organizations that assist low income or ESL taxpayers. In order to be considered an educational activity, information about a specific tax topic or topics must be conveyed to the audience. Examples of educational activities include a presentation about tax collection issues made to ESL taxpayers, a workshop for low income workers about how to properly complete a Form W-4 for withholding, or a free training session at a local social services organization to educate case workers about earned income tax credit (EITC) eligibility rules to so they can better assist their clients.

Low income taxpayer means an individual whose income does not exceed 250 percent of the Federal Poverty Guidelines, as determined in accordance with official guidance published by the federal government. A business or other entity is not a low income taxpayer eligible for LITC representation. An individual trying to resolve the individual’s tax liability arising from involvement with a business can be a low income taxpayer. For example, an individual who is personally liable for taxes owed from a business (e.g., a responsible person within the meaning of IRC § 6672) may be a low income taxpayer, provided the individual otherwise meets the definition. Low income status is determined by reference to the Federal Poverty Guidelines, which are updated annually (usually in late January) by the Department of Health and Human Services (HHS). The current LITC Income Guidelines can be found in Section V. A, Representation, of this publication.

Nominal fee means a fee that is insignificantly small or minimal. A nominal fee is a trivial payment, bearing no relation to the value of the representation provided, taking into account all the facts and circumstances. A fee does not include reimbursement for actual costs incurred (e.g., photocopies, court costs, and expert witness fees).

A nominal fee must be a flat fee; the fee cannot fluctuate based on an hourly rate, the type of services the LITC is providing, and if being charged, must be paid by every taxpayer receiving representation from the LITC.

Pro bono panel means a group of qualified representatives who have agreed to accept taxpayer referrals from an LITC and provide representation or consultation free of charge to low income or ESL taxpayers.

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Program to educate means the conduct of an activity intended to educate both low-income taxpayers and individuals for those for whom English is a second language (ESL) about their rights and responsibilities under the Internal Revenue Code. For additional information, see Educational Activities.

Program plan means an outline of a clinic’s planned operations, including a description of the particular services to be offered, how the services will be delivered, the intended recipients of the services, and numerical goals.

Qualified representative means an attorney, certified public accountant, or enrolled agent who is authorized to practice before the IRS. The term qualified representative also means an individual authorized to practice before the IRS pursuant to 31 CFR § 10.7(d) (e.g., a student, law graduate, tribal court advocate, or other individual for whom the IRS has issued a special appearance authorization). Thus, a student or law graduate working under the supervision of a qualified representative is a qualified representative if the Director of the LITC Program Office has authorized that student or law graduate to practice before the IRS. See Delegation Order 25-18 (Rev. 2), IRM 1.2.52.19 (Sept. 9, 2015). In addition, the term qualified representative means an individual authorized to appear before the applicable court where the controversy with the IRS will be adjudicated. An unenrolled return preparer who can practice before the IRS based upon return preparation is not a qualified representative for purposes of the LITC program, because the authority of the unenrolled return preparer to act as a representative is limited to only certain taxpayers and select functions of the IRS.

Note: For more information on student representation of taxpayers, see Section V. A, Representation.

Referral activities for which grant funds may be spent are the referral of low income taxpayers to a pro bono panel for representation or consultation.

Representing a taxpayer in a controversy means acting as an agent of the taxpayer in an advocacy capacity in a matter before the IRS, the United States Tax Court, another federal court, or before a state or local tax authority when the clinic is representing the taxpayer in a related federal controversy. Fact finding or advice alone is not representation.

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II. GRANT RECIPIENT ELIGIBILITY

To receive an LITC grant, an organization must represent low income individual taxpayers in controversies with the IRS and educate low income and ESL taxpayers about their rights and responsibilities as U.S. taxpayers. Additionally, organizations must offer LITC services for free or for no more than a nominal fee (except for reimbursements of actual costs incurred). LITCs are encouraged to devote a significant portion of their budget to staffing. Figure 3 displays a sample budget breakdown for a clinic receiving a $100,000 LITC grant.

Figure 3, Sample Budget Broken Down by IRS Grant and Matching Funds Sample Budget Broken Down by IRS Grant and Matching Funds

Federal Funds Percent of

Budget AllocationMatching Funds Total Budget

STAFFING

Personnel

Volunteer Services

Fringe Benefits

$130,788 | 55.7%

CONTRACTUAL

(i.e., Rent, Utilities)

TRAVEL

EQUIPMENT

OTHER

EXPENSES

INDIRECT

EXPENSES

TOTAL

EXPENDITURE

$36,086 | 16.3%

$34,213 | 14.6%

$ 85,734 $ 115,353 $ 201,087 86.5%

$ 2,201 $ 6,849 $ 9,050 3.9%

$ 1,995 $ 2,166 $ 4,161 1.8%

$ 87 $ 222 $ 309 0.1%

$ 2,710 $ 7,881 $ 10,591 4.6%

$ 7,273 $ 0 $ 7,273 3.1%

$ 100,000 $ 132,471 $ 232,471 100%

$71,405 $59,383

$36,086

$19,884

$14,329

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A. SUBGRANTS ARE PROHIBITED

A grantee may not make a subgrant of LITC grant funds to another organization or individual. A subgrant is a payment to another organization or contractor to provide controversy representation or ESL education as compared to a payment for providing goods and services to the grantee. For example, a grantee may not pay another organization to prepare and conduct its ESL educational activities, although the clinic could pay a firm to translate its educational materials into another language.

B. REQUIREMENTS FOR PROVIDING LITC SERVICES

At least 90 percent of the taxpayers represented must have incomes that do not exceed 250 percent of the Federal Poverty Guidelines and the amount in controversy for any taxable year generally must not exceed the amount specified in IRC § 7463 for eligibility for special small case procedures in Tax Court (currently $50,000) (see Section V. A, Representation).

A grantee may provide qualifying LITC services within a broader spectrum of activity. A grantee may provide representation in nontax matters as well as representation in tax matters as long as LITC grant funds are used only to support the representation of eligible taxpayers in a controversy with the IRS or a related state or local tax authority.

Matching Funds Are Required on a Dollar-for-Dollar Basis IRC § 7526(c)(5) requires grantees to provide matching funds on a dollar-for-dollar basis for all federal funds awarded by the IRS. Only funds that are used in direct support of the LITC Program qualify as matching funds.

What Contributions Qualify as Matching Funds?

Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 CFR § 200.306 provides that all contributions, including cash and third-party in-kind, shall be accepted as part of the grantee’s cost sharing or matching when such contributions:

nn Are verifiable from the grantee’s records;

nn Are not included as contributions for any other federally assisted project or program;

nn Are necessary and reasonable for proper and efficient accomplishment of project or program objectives;

nn Are allowable under the applicable cost principles;

nn Are not paid by the federal government under another award, except where authorized by the federal statute to be used for cost sharing or matching;

nn Are provided for in the approved budget when required by the federal awarding agency; and nn Conform to other provisions of 2 CFR Part 200, when applicable.

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Grant funds received from the Legal Services Corporation are not considered federal funds and therefore can be used as a source of matching funds.

For more detailed information regarding the matching funds requirement, see Section VI. E, Meeting the Matching Funds Requirement.

Charging More Than a Nominal Fee for Services Is Prohibited An LITC may not charge more than a nominal fee for its services, although reimbursement of actual costs incurred (e.g., photocopying, court costs, and expert witness fees) is permitted. If a clinic charges a fee, it must charge that same fee to all taxpayers, regardless of the services being sought. The goal of the LITC Program is to enhance access to representation, education, and advocacy services for low income taxpayers. If the amount that a clinic charges results in fewer taxpayers assisted, the goal of the Program is not being achieved and that amount is not nominal. A clinic may not charge a separate or additional fee (even if it is nominal) to prepare a tax return or a claim for refund.

C. START-UP EXPENSES MAY BE PAID USING LITC GRANT FUNDS

An applicant may be awarded an LITC grant for the full grant year although it anticipates that it will not begin representing taxpayers until after the start of the grant year. An applicant may also be awarded a grant although it anticipates that it will not begin representing taxpayers until after the close of the grant year for which the grant is awarded. All grant recipients must satisfy the statutory matching funds requirement during the period covered by the grant and must meet all reporting requirements, regardless of when operations begin. Reports should provide information on the status of the start-up. In addition, LITC grants to these applicants will be conditioned on the conduct of qualifying activities during the immediately succeeding grant year; however, grant funds for the immediately succeeding grant year are not guaranteed to be awarded.

D. COMPLIANCE WITH FEDERAL TAX AND FEDERAL NONTAX OBLIGATIONS

An applicant must be in full compliance with its federal tax responsibilities when applying for an LITC grant and also throughout the grant year. Standard Form 424 (Appendix, 81–85) asks whether the applicant is delinquent on any federal debt. In general, funds will not be awarded to an applicant with any outstanding federal nontax debt. The LITC Program Office utilizes the Do Not Pay List to determine ineligible grant recipients and prevent improper payments. See donotpay.treas.gov for more information.

To facilitate the resolution of any potential tax compliance issues, Standard Form 424, Application for Federal Assistance (specifically the Applicant Federal Debt Delinquency Explanation), and Form 13424, Low Income Taxpayer Clinic (LITC) Application Information, require applicants to provide contact information for the individual responsible for handling the organization’s federal tax matters. Failure to provide an appropriate contact could delay application processing or the receipt of grant funds.

http://www.census.gov/population/www/cps/cpsdef.html http://ustaxcourt.gov/clinics.htm https://donotpay.treas.gov/

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An outstanding federal tax debt is any unpaid federal tax liability (including penalties and interest) that has been assessed, is not disputed, and for which all judicial and administrative remedies have been exhausted or have lapsed. An applicant or grant funded organization that has entered into and remains current with an installment agreement or other payment arrangement with the federal government will be considered in compliance with any federal tax or nontax obligation and will be eligible for funding.

E. CIVIL RIGHTS REVIEWS

To the extent necessary to make a Civil Rights Compliance determination, the Civil Rights Division (CRD) of the IRS may request additional data only to the extent that it is readily available or can be compiled within a reasonable manner. Examples of such data and information include, but are not limited to:

nn The manner in which services are or will be provided by the program and related data necessary for determining whether any persons are or will be denied such services on the basis of prohibited discrimination;

nn The population eligible to be assisted by race, color, national origin, age, sex, or disability;

nn Data regarding covered employment, including use or planned use of bilingual public contact employees serving beneficiaries of the program, where necessary to permit effective participation by beneficiaries with limited English proficiency;

nn The location of existing or proposed facilities connected with the program and related information adequate for determining whether the location has or will have the effect of unnecessarily denying access to any persons on the basis of prohibited discrimination;

nn The present or proposed membership, by race, color, national origin, sex, age, or disability, in any planning or advisory body that is an integral part of the program; and nn Data, such as demographic maps of the racial composition of affected neighborhoods or census data.

A CRD staff member will review each grant application and continuation request for compliance with civil rights reporting requirements. Upon completion, the CRD will forward a preliminary civil rights determination based on the information in the grant application or continuation request to the LITC Program Office. No LITC grant funding may be awarded until the CRD has made a preliminary determination of probable or conditional compliance. Department of Justice regulations state that all federal agency staff determinations of Title VI compliance shall be made by or be subject to review by the agency’s civil rights office.

The CRD annually conducts selected post-award reviews to ensure civil rights requirements are in place and to provide technical assistance. The following are examples of civil rights compliance items addressed during site reviews:

nn External building accessibility (e.g., accessible entrances, curb cuts, sufficient parking spaces for persons with disabilities);

nn Interior accessibility (e.g., signage for emergency routes, routes to and within the service area, sufficient seating in the service area, restrooms, water fountains and elevators);

nn Non-discrimination policies (e.g., Publication 4053, Your Civil Rights are Protected, displayed in service areas, the organization’s non-discrimination policy posted and disseminated in marketing);

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nn Accommodations for persons with disabilities (e.g., sign language interpreters, Braille/large print documents); and nn Accommodations for persons with limited English proficiency (e.g., bilingual volunteers, language interpreters/language line, community resources).

The results from the selected site reviews are compiled into a report and provided to the Office of the Taxpayer Advocate.

Contacting the Civil Rights Division For additional information on civil rights requirements, see Publication 4454, Your Civil Rights are Protected, or contact the Operations Director, Civil Rights Division at edi.civil.rights.division@irs.gov. If you believe you’ve been discriminated against, send a written complaint to:

Director, Civil Rights Unit Office of Equity, Diversity and Inclusion Internal Revenue Service, Room 2413 1111 Constitution Avenue NW Washington, DC 20224

F. OTHER ASSURANCES AND CERTIFICATIONS

Trafficking Victims Protection Act of 2000 The Trafficking Victims Protection Act (TVPA) of 2000, as amended (22 U.S.C. § 7104), requires any agency that awards grants to include a condition authorizing the agency to terminate the grant if the grantee engages in certain activities related to trafficking in persons. As part of the implementation of the Act, the Office of Federal Financial Management has established terms that must be included in every grant agreement. See

2 CFR § 175.15.

The IRS may terminate the award, without penalty, if the grantee engages in, or uses labor recruiters, brokers, or other agents in violation of the TVPA of 2000. The terms applicable to a grantee are as follows:

You as the recipient, and your employees, may not:

a. Engage in severe forms of trafficking in persons during the period of time that the award is in effect;

b. Procure a commercial sex act during the period of time that the award is in effect;

c. Use forced labor in the performance of the award; or

d. Engage in acts that directly support or advance trafficking in persons, including the following acts:

i. Destroying, concealing, removing, confiscating, or otherwise denying an employee access to that employee’s identity or immigration documents.

mailto:edi.civil.rights.division@irs.gov

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ii. Failing to provide return transportation or pay for return transportation costs to an employee from a country outside the United States to the country from which the employee was recruited upon the end of employment if requested by the employee, unless:

nn exempted from the requirement to provide or pay for such return transportation by the Federal department or agency providing or entering into the grant, contract, or cooperative agreement; or nn the employee is a victim of human trafficking seeking victim services or legal redress in the country of employment or a witness in a human trafficking enforcement action.

iii. Soliciting a person for the purpose of employment, or offering employment, by means of materially false or fraudulent pretenses, representations, or promises regarding that employment.

iv. Charging recruited employees unreasonable placement or recruitment fees, such as fees equal to or greater than the employee’s monthly salary, or recruitment fees that violate the laws of the country from which an employee is recruited.

The IRS may unilaterally terminate the award, without penalty, if it determines that the grantee has violated one of the provisions in a, b, c, or d above, or if the IRS official authorized to terminate the award determines that an employee of the grantee violated a prohibition in items a, b, c, or d above through conduct that is either:

nn associated with performance under the award; or nn imputed to the grantee using the standards and due process for imputing the conduct of an individual to an organization that are provided in 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Non-Procurement), as implemented by the Department of the Treasury at 31 CFR Part 19.

Federal Funding Accountability and Transparency Act The Federal Funding Accountability and Transparency Act (FFATA) of 2006, as amended, is intended to empower Americans with the ability to hold the government accountable for each spending decision. Each applicant must ensure it has the necessary processes and systems in place to comply with the FFATA reporting requirements should it receive funding. Office of Management and Budget (OMB) has issued guidance to establish requirements for grantees to report information about executive compensation in certain circumstances.

See 2 CFR Part 170.

Preparing for and Responding to a Breach of Personally Identifiable Information OMB requires that when a grant recipient creates, collects, uses, processes, stores, maintains, disseminates, discloses, or disposes of personally identifiable information within the scope of a Federal award, the IRS shall ensure that the grant recipient has procedures in place to respond to a breach. In addition, a grant recipient must notify the IRS in the event of a breach. Because LITCs have access to their clients’ and prospective clients personally identifiable information, LITCs must have procedures in place to respond to a breach, and must notify the LITC Program Office in the event of a breach. See OMB Memorandum M-17-12, Preparing for and Responding to a Breach of Personally Identifiable Information (Jan. 3, 2017).

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Certain Criminal Law Violations Federal law currently prohibits the award of grant funds to any corporation that was convicted of a felony criminal violation under any Federal law within the preceding 24 months, where the IRS is aware of the conviction, unless a federal agency has considered suspension or disbarment of the corporation, and made a determination that denial of the grant is not necessary to protect the interests of the government. See Public Law 114-113, Division E, Title VII, § 746 (2015); Public Law 114-223, Division C, § 101(a)(5) (2016), as extended by Pub Law 114-254, § 101 (2016). If necessary, the LITC Program Office will advise grantees of any changes in this prohibition for fiscal year 2018.

In addition, all applicants must disclose all violations of Federal criminal law involving fraud, bribery, or gratuity violations potentially affecting the grant award. Failure to make required disclosures can result in any of the remedies described in 2 CFR § 200.338, including suspension or debarment. See 2 CFR § 200.113.

Conflict of Interest Policy Applicants and grantees must have a written conflict of interest policy which contains the terms as listed in this section. LITCs must disclose in writing to the LITC Program Office any potential conflict of interest situation and how the conflict was resolved.

At a minimum, an LITC grantee’s Conflicts of Interest Policy (“Policy”) must:

nn Apply to at least the grantee’s employees, officers, members of its board of directors (including non-director members of committees), and pro bono panel members (“Covered Individuals”).

nn Apply to at least all grantee matters involving the use of LITC grant funds and matching funds, in whole or in part, including, but not limited to, grants, contracts, procurements, leases, investments, other commitments of grantee resources, and personnel matters.

nn Cover at least situations when an outside interest, activity, or relationship influences or appears to influence the ability of a Covered Individual to exercise objectivity, or impairs or appears to impair his or her ability to perform his or her responsibilities impartially and in the best interests of the grantee (“Conflict of Interest” or “Conflict”).

nn Cover at least situations when an outside interest, activity, or relationship influences or appears to influence the Covered Individual’s impartiality or duty of loyalty to a client.

The Policy must require Covered Individuals to avoid legal, financial, personal, or other Conflicts and potential Conflicts involving the grantee, and to promptly disclose any such Conflicts and potential Conflicts that arise.

Covered Individuals must recuse themselves from a position of decision-making authority or influence on decisions or actions with respect to any such Conflicts and potential Conflicts until resolved.

Covered Individuals must report on any situations that they know, or reasonably should know will present a Conflict or a potential Conflict. The Policy must specify to whom Conflicts must be reported and how Conflicts

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will be addressed and resolved. Covered Individuals may not participate in any situation involving a Conflict or potential Conflict, unless the grantee determines, through these procedures that the:

nn Conflict or potential Conflict is not substantial; and nn Covered Individual’s participation is in the best interest of the LITC and the LITC’s clients.

Association of Community Organizations for Reform Now At this time, Federal law prohibits the IRS from providing funding to the Association of Community Organizations for Reform Now (ACORN) or any of its affiliates, subsidiaries, allied organizations, or successors.

See Public Law 114-113, Division H, Title V, § 522; Public Law 114-223, Division C, § 101(a)(5) (2016), as extended by Public Law 114-254, § 101 (2016). This prohibition may be lifted by next fiscal year. Contact the LITC Program Office for up-to-date information about this prohibition.

Other Applicable Law and Regulations Programs involving use of federal funds are governed by a wide variety of federal laws and regulations. These include:

nn Restrictions on political activities at 18 U.S.C. §§ 595, 598, 600-603;

nn The national preservation program requirements (54 U.S.C. § 300101 et seq.);

nn Whistleblower protections at 41 U.S.C. § 4712;

nn Rules governing allowable costs at 41 U.S.C. §§ 4304, and 4310;

nn Environmental requirements of the Clean Air Act (42 U.S.C. § 7401 et seq.); and nn The non-pollution requirement of the Federal Water Pollution Control Provisions (33 U.S.C. § 1251 et seq.).

Assurances of compliance are required for LITC funding, according to the “common rule” on non-procurement, debarment, and suspension adopted by Department of Treasury at 31 CFR Part 19, Subpart C. An applicant must certify that its organization and Clinic Director are not presently debarred or suspended from covered transactions by any federal agency. In addition, an applicant must indicate that within the three-year period before applying for a grant, its organization and Clinic Director have not been convicted of or had a civil judgment rendered against them for fraud, theft or certain other offenses, and have not had one or more public transactions terminated for cause or default. An applicant must also indicate that its organization and Clinic Director are not presently criminally or civilly charged with certain offenses.

Additional assurances are required according to the governmentwide requirements for a drug-free workplace (41 U.S.C. §§ 8101-06), adopted by the Department of the Treasury at 31 CFR Part 20, Subpart B and C, and assurance of civil rights compliance, as specified above.

When an applicant submits Standard Form 424 and checks the box on line 21 marked “I agree,” the applicant is agreeing to each of the assurance and certification provisions that accompany Standard Form 424. The list of assurances and certifications is included in the Appendix on page 86.

http://www.irs.gov/advocate/article/0,,id=117703,00.html

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III. HOW TO APPLY FOR…