2024-3319.pdf

2024 Grant Application Package and Guidelines iLOW INCOME TAXPAYER CLINICS

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MAY 2023

DEAR PROSPECTIVE LOW INCOME TAXPAYER CLINIC GRANT APPLICANT:

I am excited to announce the opening of the 2024 Low Income Taxpayer Clinic (LITC) grant application period at a time when the IRS is embarking on its Strategic Operating Plan to improve taxpayer service and provide additional assistance to taxpayers and tax professionals. The application period will begin on May 8, 2023, and conclude on June 26, 2023. We are eager about the prospect of increasing geographic coverage, providing more service to taxpayers, and adding additional LITCs for the new grant year and appreciate your consideration and interest. The work of the LITCs has a significant impact on the taxpayers they serve. In 2021, IRS-funded tax clinics helped over 20,000 low-income taxpayers resolve their issues with the IRS and provided consultations to nearly 16,000 more taxpayers. They conducted over 900 educational activities, educating over 143,000 taxpayers about a variety of tax topics, including their rights and responsibilities as U.S. taxpayers. They also elevated 150 systemic issues to the Taxpayer Advocate Service to help ensure the fairness and integrity of the U.S. tax system for all taxpayers.

In December 2022, with the enactment of the Consolidated Appropriations Act, 2023, the LITC Program received a significant show of support. For fiscal year (FY) 2023, funding was increased from $13 million to $26 million, and the maximum award amount was increased from $100,000 to $200,000. The LITC Program then launched a supplemental funding opportunity in March 2023 to provide more help to more taxpayers.1

Although we are uncertain about the amount and timing of 2024 appropriations, we know that President Biden’s 2024 budget request includes a continuation of LITC funding at $26 million and the $200,000 per award funding cap. Given the budget request for the upcoming 2024 grant year, the LITC Program Office will allow applicants to request up to $200,000. We will also continue the ESL Education Pilot Program that we rolled out as part of a 2023 supplemental funding opportunity. If Congress does not continue the program’s funding at $26 million and/or the increased per award funding cap to $200,000, the Program Office will adjust each grant recipient’s award accordingly to reflect any limitations in place at that time.

The changes made in December 2022 are not a permanent solution, and we recognize that uncertainty makes it difficult for LITCs to plan for expansion and development. I have recommended that Congress adopt a permanent fix by amending IRC § 7526 to remove the award funding cap and allow the IRS to reduce the match requirement to 25 percent, where doing so would provide coverage for more taxpayers.2 We will keep you informed of any funding changes to the grant program.

The IRS remains committed to achieving maximum access to representation for low-income taxpayers, education for ESL taxpayers, and receiving feedback from LITCs through their advocacy on issues that impact these taxpayers. In awarding 2024 LITC grants, we will continue to work toward the following program goals:

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

1 88 Fed. Reg. 13864 (March 6, 2023).

2 See National Taxpayer Advocate 2023 Purple Book, Compilation of Legislative Recommendations to Strengthen Taxpayer

Rights and Improve Tax Administration 145-147 (Legislative Recommendation: Expand the Protection of Taxpayer Rights by Strengthening the Low Income Taxpayer Clinic Program).

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IRS Publication 3319 outlines the eligibility requirements for LITC matching grants and provides application instructions. This publication, including the appendices, is a good reference for LITC grant recipients and includes program and administrative guidance for the grant year.

The IRS may award grants to qualifying organizations for up to a three-year period. However, funding is provided for one-year budget periods (January 1 - December 31), subject to the availability of annually appropriated funds provided by Congress. Generally, first-time applicants will only be awarded a single-year grant, unless the Notice of Funding Opportunity indicates otherwise to encourage applicants in areas with limited or no LITC coverage. For all awards, every dollar of federal funds provided by the IRS must be matched with cash from non-federal sources or third-party in-kind contributions.

All Full Grant Applications and Non-Competing Continuation (NCC) Requests must be submitted electronically by 11:59 p.m. Eastern Time (ET) on June 26, 2023, via www.grants.gov or https://home.grantsolutions.gov/home. The cost of preparing and submitting applications and NCC Requests is the responsibility of each applicant. On May 11, 2023, and May 15, 2023, from 1:00 pm to 2:30 p.m. ET, the LITC Program Office will host webinars for organizations interested in submitting a full application or learning more about the application process. For more information, including a link to register for the webinar, visit www.taxpayeradvocate.irs.gov/about-us/litc-grants. This webpage also includes a guidance document to help applicants with completing Form 13424-M, Low Income Taxpayer Clinic Application Narrative. Existing LITCs submitting an NCC Request should check the LITC Toolkit for the date and time of a session on that specific topic.

Qualified applicants will be notified in November 2023 of their selection for an award for the 2024 grant year.

Award recipients must attend the Annual LITC Grantee Conference, which will be held in December 2023, in the Washington, D.C. area. The Annual Conference provides an opportunity for new award recipients and returning LITCs to meet, network, share best practices, and obtain substantive training on tax law topics relevant to low-income and ESL taxpayers. Award recipients will be notified of the conference dates as soon as they are determined. 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.

We appreciate your interest in the LITC Program, and we look forward to another successful grant year as we work to help LITCs ensure the fairness and integrity of the tax system for low-income and ESL taxpayers.

Sincerely, Erin M. Collins National Taxpayer Advocate https://www.grants.gov/web/grants/home.html https://home.grantsolutions.gov/home/ https://www.taxpayeradvocate.irs.gov/about-us/litc-grants/ https://www.taxpayeradvocate.irs.gov/wp-content/uploads/2023/03/Reminders_and_Tips_for_Completing_Form_13424-M-032023.pdf mailto:LITCProgramOffice@irs.gov.

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WHAT’S NEW THIS YEAR

Below is a list of changes made to the program for the 2024 grant year with a cite to the relevant text in the publication; however, all are encouraged to read the entire publication. By accepting the Notice of Award, all grant recipients are agreeing to follow the guidelines provided in this publication.

n The areas (states and counties) of special consideration where there are no clinics or very limited coverage for the 2023 grant year have been updated. (Page 2) n The chart of important dates has been updated, including the dates for several informational webinars to help organizations navigate the application process. (Page 3) n Wherever the Publication (including any Forms and Instructions) references that the maximum annual federal funding available is $100,000, please substitute $200,000. This increase is included in the President’s FY 2024 Budget Request. If the amount differs when Congress appropriates funds, the LITC Program Office will adjust all awards accordingly. (Page 3 and throughout) n In the “Key Terms and Definitions” section, the term “case” was clarified so that when a clinic refers a matter to a qualified representative, it may count the matter as a case so long as it provides ongoing monitoring and support. (Page 6) The term “referral” was updated to include the referral of low-income taxpayers to qualified representatives or to an LITC for representation. This change removed language that did not allow a grant solely for referring low-income taxpayers to qualified representatives. (Page 9) n The “Eligible Applicants” section has been updated. (Page 12) n The IRS will continue the ESL Education Pilot Program that was rolled out as part of the February 2023 supplemental funding opportunity. (Page 12) n Figure 3, Allowable and Unallowable Expenses, pre-award costs were added, see 2 CFR § 200.458.

(Page 24) n The “Special Rule for Valuing Volunteer Services of a Qualified Representative” section was updated.

For the 2024 calendar year, the maximum rate at which to value services provided by a qualified representative is $230 per hour, as prescribed in Revenue Procedure 2022-38, 2022-45 I.R.B. 445, unless the representative can establish that a special factor, as described in IRC § 7430(c)(1)(B)(iii), applies. (Page 30) n Under the LITC Program Office Evaluation, Additional Considerations, a paragraph was added:

n For organizations that are requesting federal funds to provide representation by referring taxpayers to qualified representatives, award decisions will also consider the following:

the qualifications of the representatives who have agreed to accept pro bono case referrals from the LITC; and the ability of the organization to monitor case referrals and ensure that the pro bono representatives are handling the cases properly, including taking timely case actions and ensuring services are offered for free. (Page 35) n In the “Qualified Tax Expert” section, the first sentence is replaced with the following: Qualified Tax Expert (QTE) is, generally, a staff member of the clinic (or a volunteer in the case of the ESL iv LOW INCOME TAXPAYER CLINICS

Education Pilot Program). The QTE must have sufficient tax law expertise to oversee technical, substantive, and procedural tax matters. (Page 38) n The key staff positions section was also clarified with the following: The Clinic Director and the QTE must not be under suspension or disbarment from practice before the IRS and must be in good standing with all relevant professional state licensing authorities and federal courts. The Program Office will seek confirmation of the status of these individuals before awarding any grant funds.

(Page 38) n The “Staff Member Must Be Able to Represent Taxpayers” section was replaced with a new section, “Access to Representation in the U.S. Tax Court and Other Federal Courts.” (Page 38) n The “Maintaining a Physical Location” section was updated to allow LITCs to utilize workshare space as a physical place of business when certain criteria are met. (Page 38) n The “Monitoring Referrals to Low Income Taxpayer Clinic Volunteers” section was revised to provide that ongoing monitoring is not required if referring a case to another LITC. (Page 46) n A new subsection was added to the “Recruiting and Supervising Volunteers” section. Representation Through Referral: An LITC can meet the requirement to provide representation by referring qualified taxpayers to a qualified representative. The representative must agree to provide representation free of charge. One goal in expanding qualifying activities to allow an LITC to refer the majority of or all cases to a qualified representative is to expand access to unserved taxpayers or underserved areas of the country. These types of LITCs can also help to ensure that the resources of current LITCs are maximized. To the extent that these programs are contacted by taxpayers from a locality where existing LITC(s) operate, the program should determine whether a local LITC is able to take the case.

(Page 46) n Figure 6, LITC Income Guidelines, was updated to reflect annual updates to the federal poverty guidelines. (Page 52) n A note was added under reporting requirements: For recipients of the ESL Education Pilot grants, additional reporting guidance will be provided via the LITC Toolkit. (Page 80) n The Standard Form 424, Application for Federal Assistance, line 14, Areas Affected by Project, instruction is revised:

n Add an attachment listing the areas affected which must be reported at the county level. If the applicant defines service area by city or region (e.g., northwest region of the state), list all counties by name within the geographical bounds of the region. If the clinic serves the entire state, list the state and note “All Counties.” If coverage includes multiple states, list each state separately and “All Counties” or if not serving an entire state, list all counties served by name within the state. (Page 100) n Additional updated guidance has been issued to assist with completing Form 13424-M, LITC Application Narrative, and can be found online at www.taxpayeradvocate.irs.gov/about-us/ litc-grants/. It is especially important for all ESL Education Pilot Program applicants to review this guidance.

https://www.taxpayeradvocate.irs.gov/about-us/litc-grants/ https://www.taxpayeradvocate.irs.gov/about-us/litc-grants/ vLOW INCOME TAXPAYER CLINICS

WHAT’S NEW THIS YEAR

AVOIDING COMMON ERRORS AND MISSTEPS WHEN APPLYING

To assist with the application process, see the list below of commonly made errors and missteps. Please double check your Full Grant Application or NCC Request to avoid these errors and ensure your application is timely processed and reviewed.

Standard Form 424 n Legal name does not match the legal name in SAM.gov (Item 8a).

n The Employer Identification Number (EIN) provided does not match the EIN in SAM.gov (Item 8b).

n Missing attachment listing counties covered (Item 14).

n Missing attachment listing congressional districts covered (Item 16b).

n Requesting a multiyear grant utilizing the wrong proposed project end date (Item 17b).

n Missing the amount(s) of matching funds to be provided (Items 18b-f).

Form 13424-M n Applicants indicate a single audit was “Qualified” when it was described as “Unqualified” and therefore the correct selection on the form is “Unmodified.”

n No responses or incomplete responses are provided in the Civil Rights Review section; in particular, the response to question D should address both the needs of individuals with limited English proficiency (LEP) and those who may need a reasonable accommodation to access services. “Not Applicable” is not an appropriate response because the questions apply to all organizations.

Form 13424-J n Returning applicants prepare the new grant year budget working off the one submitted with the original application the prior year instead of working off the one approved during the application amendment process. Working off the approved budget will ensure that the same errors are not made again.

n No full-time equivalent (FTE) is provided for staff on Form 13424-J, Detailed Budget Worksheet and Narrative Explanations, or applicants fail to state how many hours per week is considered full-time.

The Personnel section of the Detailed Budget Narrative Explanations should start with a statement defining how many hours constitute a work week; for example, “ABC clinic computes 1.0 FTE on a 40-hour work week (2,080 hours per year).”

n There is no breakdown of travel and training expenses into categories such as lodging, transportation, and meals and incidentals.

Project Abstract (for NCC Requests only) n The form is missing the four primary numerical goals:

n New representation cases to be opened in the calendar year;

n Consultations with low-income and ESL taxpayers;

vi LOW INCOME TAXPAYER CLINICS n Educational activities to low-income and ESL taxpayers; and n Low-income and ESL taxpayers to be reached in educational activities.

n Program Plan changes are not addressed. If there are no changes, include a statement indicating no changes. “Not Applicable” is not an acceptable response because the question applies to all organizations.

n No responses or incomplete responses are provided in the Civil Rights Review section; in particular, the response to question D should address both the needs of individuals with LEP and those who may need a reasonable accommodation to access services. “Not Applicable” is not an appropriate response because the questions apply to all organizations.

Employer Identification Number and System for Award Management Registration Applicants fail to apply early enough to the IRS to receive an EIN, which is needed to complete the SAM.gov registration process. SAM registration is a multi-step process that can take four to six weeks to complete.

Attachments n The Indirect Cost Rate Agreement (ICRA) submitted by applicants is incomplete or expired. To determine whether the ICRA is properly applied, the LITC Program Office must know what costs were included in the Modified Direct Costs so this part of the agreement should be supplied. If the ICRA is expired, the applicant should provide an explanation including whether an extension was requested and, if so, the date it was requested.

n The tax-exempt determination letter (if applicable) is not provided.

n The letter of accreditation, for academic institutions, is not provided.

n An incomplete copy of the single audit is submitted or the copy is missing (and it is unavailable on the Federal Audit Clearinghouse website).

n The Tax Compliance Officer substantiation documentation is not attached or is insufficient.

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TABLE OF CONTENTS

WHAT’S NEW THIS YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

AVOIDING COMMON ERRORS AND MISSTEPS WHEN APPLYING . . . . . . . . . . . . . . . . . . . . . . . v

I. LITC PROGRAM DESCRIPTION

A. LITC Grant Program Priorities

B. History of the LITC Program

C. Statutory Authority to Fund LITCs

D. Key Terms and Definitions

II. FEDERAL AWARD INFORMATION

A. Awards Are Subject to Congressional Appropriations

B. Award Performance Period

C. Subawards Are Generally Prohibited

D. LITC Grants Are Not Cooperative Agreements

III. AWARD ELIGIBILITY REQUIREMENTS

A. Eligible Applicants

B. Requirement to Provide Matching Funds Equal to Award

C. Other Eligibility Requirements

i. Using Grant Funds to Support Other Activities is Prohibited

ii. Charging More Than a Nominal Fee for Services Is Prohibited

iii. Compliance With Federal Tax and Nontax Requirements

iv. Debarment and Suspension

IV. APPLICATION AND SUBMISSION PROCESS

A. Accessing the LITC Grant Application Package and Guidelines

B. Required Content for LITC Full Grant Applications and Non-Competing Continuation Requests

i. Determining Type of Application

ii. Submitting a Full Grant Application on Grants.gov

iii. Instructions for Completing Full Grant Application

iv. Submitting a Non-Competing Continuation Request

v. Instructions for Completing a Non-Competing Continuation Request

vi. Withdrawing Applications After Submission

C. System for Award Management Registration Requirement and Unique Entity Identifiers . . . 19 viii LOW INCOME TAXPAYER CLINICS

i. System for Award Management

ii. Employer Identification Number

iii. Unique Entity Identifier

iv. Organization Name Change Requests

D. Submission Due Dates and Times

i. Due Date for LITC Full Grant Applications and Non-Competing Continuation Requests

ii. Incomplete or Late LITC Full Grant Applications and Non-Competing Continuation Requests

E. Budget Considerations and Funding Restrictions

i. Spending LITC Grant Funds and Matching Funds

ii. Direct vs. Indirect Expenses

iii. Meeting the Matching Funds Requirement

iv. Office of Management and Budget Audit Requirement

V. APPLICATION REVIEW

A. Technical Evaluation of Full Grant Applications and Scoring Criteria

B. LITC Program Office Evaluation and Selection of Full Grant Applications and Non-Competing Continuation Requests

i. LITC Program Office Evaluation

ii. Civil Rights Compliance Reviews

VI. AWARD ADMINISTRATION

A. Notification of Selection

B. Notice of Award

C. Administrative Requirements

i. Standards for Operating a Low Income Taxpayer Clinic

ii. Low Income Taxpayer Clinic Program Office Webinars

iii. Annual Low Income Taxpayer Clinic Grantee Conference

iv. Developing a Community Outreach Plan

v. Building Community Partnerships

vi. Networking With Other Low Income Taxpayer Clinics

vii. Mentoring

viii. Technical Assistance Consultation

ix. Maintaining Client Confidentiality

x. Recruiting and Supervising Volunteers ixLOW INCOME TAXPAYER CLINICS

xi. Recordkeeping and File Management

xii. Representing Low-Income Taxpayers

xiii. Education

xiv. Advocacy

xv. Preparing Tax Returns and Individual Taxpayer Identification Number Applications

D. National Policy Requirements and Administrative Requirements

i. General Compliance

ii. Managing Grant Funds

iii. Lobbying Restrictions

E. Reporting Responsibilities

i. Events Requiring Notification to the LITC Program Office

ii. Submitting the Interim Report

iii. Submitting the Year-end Report

iv. Grant Closeout

VII. LITC PROGRAM OFFICE RESPONSIBILITIES AND CONTACT

A. Structure

B. Administration

C. Assistance

D. Oversight

E. Site Assistance Visits

F. Contacting the LITC Program Office

VIII. AWARD MODIFICATION, SUSPENSION, TERMINATION, OR WITHDRAWAL

APPENDIX A

APPENDIX B

FEDERAL GRANT ACRONYMS

GLOSSARY

INDEX

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I. LITC PROGRAM DESCRIPTION

A. LITC GRANT PROGRAM PRIORITIES

LITCs Provide Representation, Education, and Advocacy LITCs ensure the fairness and integrity of the tax system for taxpayers who are low-income or speak ESL by:

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

n Educating them about their rights and responsibilities as taxpayers; and n Identifying and advocating for issues that impact these taxpayers.

LITCs must:

n Provide dollar-for-dollar matching funds; and n Offer LITC services for free or for no more than a nominal fee. See Section I.D, Key Terms and Definitions.

In December 2015, Congress enacted the Taxpayer Bill of Rights (TBOR)3 in Internal Revenue Code (IRC) § 7803(a)(3). TBOR lists rights that already existed in the IRC, putting them in simple language and grouping them into ten fundamental rights. One of the ten fundamental rights taxpayers have is the right to retain representation,4 meaning taxpayers have the right to retain an authorized representative of their choice to represent them in their interactions with the IRS. A taxpayer who cannot afford to hire a representative has the right to be informed about their potential eligibility for assistance from an LITC. The LITC Program provides free or low-cost access to representation for low-income taxpayers, so that achieving a correct outcome in an IRS dispute does not depend on a taxpayer’s ability to pay for representation.

LITC Program Coverage The IRS is committed to achieving maximum access to clinic services for low-income taxpayers under this grant program. For the 2023 grant year, however, there are several geographic areas of the country without an LITC or with very limited coverage. Thus, in awarding 2024 LITC grants, we will strive to provide services to low-income and ESL taxpayers in every state, the District of Columbia, and Puerto Rico. We will prioritize the funding of qualified applicants to open new clinics or expand existing LITC coverage in geographic areas with no clinic or very limited coverage (see list below) before adding a new clinic in a geographic area that already has a clinic or coverage.

Coverage of an area requires more than a willingness to accept a case from an area but requires that an organization take steps to promote itself as being available and willing to provide the full range of LITC services for that area.

3 See Consolidated Appropriations Act, 2016, Pub. L. No. 114-113, Division Q, § 401, 129 Stat. 2242, 3117 (Dec. 18, 2015).

4 See IRC § 7803(a)(3)(I).

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Areas of Special Consideration5

ARIZONA (Apache, Coconino and Navajo counties), FLORIDA (Baker, Bradford, Citrus, Clay, Columbia, Dixie, Duval, Flagler, Hamilton, Hernando, Lafayette, Madison, Nassau, St. Johns, Sumter, Suwannee, and Taylor counties), HAWAII, MONTANA, NEVADA, NORTH DAKOTA, and PUERTO RICO.

Figure 1, 2023 LITC Coverage by County

5 See IRS Restructuring and Reform Act of 1998, Pub. L. No. 105-206, § 3601, 112 Stat. 685, 774 (July 22, 1998).

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Important Dates for 2024 LITC Grant Program

Application Period May 8-June 26, 2023

New Applicant Webinar, Session 1 May 11, 2023

New Applicant Webinar, Session 2 May 15, 2023

Returning Applicant/ NCC Request Webinar May 25, 2023

Application Q&A Webinar June 7, 2023

Application Review and Evaluation June-November 2023

Notification of Selection/Non-Selection November 2023

Grant Year January 1-December 31, 2024

Interim Report Due July 31, 2024

Year-end Report Due March 31, 2025

B. HISTORY OF THE LITC PROGRAM

As part of the IRS Restructuring and Reform Act of 1998, Congress enacted IRC § 7526 to authorize funding for the LITC Program.6 The IRS created the LITC Program Office in 1999 to award and administer the grants and provide guidance, assistance, and oversight to LITCs 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)), and TAS is led by the National Taxpayer Advocate (NTA), who reports to the IRS Commissioner.

In 1999, the IRS awarded grants totaling nearly $1.5 million to 34 entities in 18 states and the District of Columbia. Since inception, the LITC Program has expanded its coverage and in 2023 there are 132 clinics funded with nearly $13 million.7 The LITC Program Office’s history of recruiting coupled with sound judgment in selecting federal grant recipients has fostered the growth of a nationwide network of independent organizations working toward a common purpose in their local communities. The maximum statutory award amount of $100,000 per clinic had remained constant since the creation of the program until recently with the passage of the 2023 appropriations legislation when it was increased to $200,000. Despite the funding limitation, LITCs have consistently delivered tremendous results, new clinics join each year, and the program continues to expand coverage into underserved areas of the country.

6 See IRS Restructuring and Reform Act of 1998, Pub. L. No. 105-206, § 3601, 112 Stat. 685, 774 (July 22, 1998).

7 The LITC Program Office announced a supplemental funding opportunity in February 2023. At the time this publication went to print, award decisions on those applications had not been made. Thus, the 132 clinics funded nearly $13 million is not the final funding statistics for the LITC Program for 2023.

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C. STATUTORY AUTHORITY TO FUND LITCs The authority to fund the development, expansion, or continuation of LITCs is derived from IRC § 7526. 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.

(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.

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(3) Multiyear grants. Upon application of a qualified low-income taxpayer clinic, the Secretary is authorized to award a multiyear 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.

(6) Provision of information regarding qualified low-income taxpayer clinics.

Notwithstanding any other provision of law, officers and employees of the Department of the Treasury may-

(A) advise taxpayers of the availability of, and eligibility requirements for receiving, advice and assistance from one or more specific qualified low-income taxpayer clinics receiving funding under this section, and

(B) provide information regarding the location of, and contact information for, such clinics.

D. KEY TERMS AND DEFINITIONS

90/250 requirement was established by IRC § 7526 and provides that at least 90 percent of the taxpayers represented by a clinic have incomes that do not exceed 250 percent of the Federal Poverty Level. The LITC Program uses the poverty guidelines published annually by the Department of Health and Human Services. See Section VI.C.xii, Representing Low-Income Taxpayers.

Advocacy as it relates to LITCs is zealously protecting the rights of low-income and ESL taxpayers. Advocacy can occur on an individual or systemic basis. A substantial portion of LITC work involves assisting clients with an IRS controversy. Clinics advocate for the taxpayers they represent by ensuring they are paying the correct amount of taxes, exploring all possible options for relief, and assisting them in making a fully informed decision on how best to proceed given the facts of the case and the taxpayer’s situation. Notwithstanding the unique nature of each

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taxpayer’s circumstances, similarly-situated taxpayers often experience similar problems with tax administration.

Advocacy includes, but is not limited to, identifying systemic-level issues and sharing them with TAS. TAS investigates the submissions, proposes solutions, and works with the IRS to resolve the issues, or elevates them to the NTA who can communicate the issues and proposed solutions to lawmakers and the IRS administration in her reports to Congress. Advocacy may also include responding to public requests for comments on IRS regulations or procedures and filing amicus briefs in cases addressing issues that directly impact low-income and ESL taxpayers.

Amount in controversy is the federal tax amount in dispute for each tax year for which the LITC is representing a taxpayer. Often, the amount in controversy is the amount owed or the refund requested. In some disputes with the IRS, however, the amount in controversy is the amount associated with an action taken by the IRS.

The amount in controversy 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. The amount in controversy is limited to the amount in dispute, which may be less than the amount specified in an IRS statutory notice of deficiency, a notice of determination, or a notice and demand. If the taxpayer is disputing the amount due in more than one tax year or period, the amount in controversy is determined separately for each year. See Section VI.C.xii, Representing Low-Income Taxpayers, Amount in Controversy Limit.

Cases are those matters that LITCs count and report in inventory when a taxpayer or married taxpayers retain the clinic to represent them in a controversy before the IRS or a federal court. To be counted as a case, the clinic must try to address the controversy, including developing a plan for representation. If the clinic is representing a married couple, it is counted as one case. If a taxpayer stops communicating with the clinic after a plan for representation has been developed, the clinic may still count that matter as a case. If a clinic refers the matter to a qualified representative, it may count the matter as a case so long as it provides ongoing monitoring and support.

Clinic refers to an LITC. See the definition of LITC below. Throughout this publication, the terms clinic, LITC, and grant recipient are used interchangeably.

Consultation encompasses a discussion with or correspondence to a taxpayer designed to address the taxpayer’s unique circumstances and involves an analysis tailored to the taxpayer’s factual situation. A consultation does not result in advocating for the taxpayer before the IRS or relevant court in a representative capacity but might include fact gathering and contact with the IRS that does not rise to the level of advocacy.

Controversy with the IRS is a proceeding brought by the taxpayer under the IRC or any dispute between an individual and the IRS concerning the determination, collection, or refund of any tax, penalties, or interest. The definition is very broad and encompasses all types of disputes arising under the IRC, except criminal tax matters.

For example, a controversy includes a dispute related to eligibility and receipt of Economic Impact Payments, a revocation or denial of a passport under IRC § 7345, and certain civil actions arising under IRC §§ 7431 to 7435.

The dispute may be pending in a federal court or in any tax administration function of the IRS (e.g., Examination, Collection, Appeals, Accounts Management). The dispute does not have to arise under the IRC if the dispute is with the IRS; for example, a controversy includes civil penalties arising under Title 31 if the IRS is the other party involved in the controversy. 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. Though a controversy does not include a federal criminal tax matter, it may include a state criminal tax matter. A controversy may be considered a civil matter in the federal context, but a criminal matter under state or

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local law. If the LITC is already representing the taxpayer in the federal civil matter, it may be appropriate for the LITC to expand the scope of the representation to include the state or local tax matter.

Educational activities (also referred to as programs to inform) inform ESL or low-income individuals about their rights and responsibilities as taxpayers, and tax issues of significance to the intended audience. The two education-related numerical goals referenced on Form 13424-M, Application Narrative, VII. Program Numerical Goals C and D, reference those activities delivered directly to taxpayers. Educational activities may also include a workshop or free training for organizations that assist low-income or ESL taxpayers. While activities delivered to organizations are not included in the numerical goals on Form 13424-M, these activities are reported on Form 13424-A, Low Income Taxpayer Clinic (LITC) General Information Report, and considered by the Program Office. To be considered an educational activity, information about a specific tax topic or topics must be conveyed to the audience. LITCs should address a wide range of substantive tax issues in their educational programs and materials (e.g., filing requirements, tax recordkeeping, family status issues, refundable credits, the Affordable Care Act, worker classification, identity theft, information about the audit and appeals process, and collection alternatives). Selecting education topics relevant to community needs and offering the presentations and/or presentation materials in languages commonly spoken in the community allow LITCs to reach taxpayers who otherwise might experience great difficulty communicating with the IRS. These programs are delivered in-person to a live audience, with participants registering, signing in, or being counted and allow for audience interaction with the presenter. Clinics may also use virtual platforms to deliver these programs and count them as educational activities for LITC reporting when there is a way for participants to be counted and for the presenter and participants to interact.

ESL taxpayers are persons for whom English is not their first language, which also includes those who communicate using sign language. These individuals may have an additional burden understanding taxpayer rights and responsibilities and are a priority for LITC education and outreach efforts. This differs from the term Limited English Proficiency (LEP), which relates to an individual’s relative ability to communicate and receive information in English. LEP taxpayers are a subset of ESL taxpayers but not all ESL taxpayers are LEP taxpayers.

Grants.gov is the government website used by federal agencies to post discretionary funding opportunities.

GrantSolutions is a web-based, comprehensive grant management system. Clinics use GrantSolutions for submitting an NCC Request, accepting a Notice of Award (NOA), submitting reports, and reporting program plan, staffing, or budget changes.

Key personnel are individuals necessary for the successful functioning of the LITC. Key personnel are responsible for ensuring that the LITC’s day-to-day operations run smoothly, the LITC program is delivered in accordance with the terms and conditions of the grant, finances are properly administered, legal arguments are sound, and educational materials are accurate. Key personnel include the Clinic Director, Qualified Tax Expert (QTE), and Qualified Business Administrator (QBA). See Section VI.C.i, Standards for Operating a Low Income Taxpayer Clinic.

Low-income taxpayers are individuals whose income does not exceed 250 percent of the Federal Poverty Guidelines. The Federal Poverty Guidelines are updated annually (usually in late January) by the Department of Health and Human Services (HHS). The LITC Income Guidelines, current as of publication, can be found in Section VI.C.xii, Representing Low-Income Taxpayers. A sole proprietor is considered an individual and may be

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assisted by an LITC if otherwise eligible. A business or other entity is not a low-income taxpayer eligible for LITC representation. An individual trying to resolve a tax liability arising from personal 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.

LITC is an organization receiving a grant pursuant to IRC § 7526.

Nominal fee is 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, considering all the facts and circumstances. A nominal fee must be a flat fee; the fee cannot fluctuate based on an hourly rate or the type of services the LITC is providing.

A nominal fee does not include reimbursement for actual costs incurred (e.g., photocopies, court costs, and expert witness fees).

Outreach is an activity conducted by an LITC that involves effectively publicizing and promoting the clinic’s services regarding representation, education, and advocacy on behalf of low-income and ESL taxpayers. LITCs are encouraged to identify linguistic populations, geographic service areas, or other segments of the low-income taxpayer community in which to focus outreach efforts. Outreach activities may involve direct communication (in-person contact or in writing) with taxpayers or may be accomplished through contacts with other organizations or groups that assist low-income and ESL taxpayers. Additional guidance on effective outreach can be found in Section VI.C.iv, Developing a Community Outreach Plan. Outreach plans should be developed before the start of the grant year during which representation and other assistance will be offered.

Pro bono panel is a group of qualified representatives (attorneys, certified public accountants (CPAs), or enrolled agents (EAs)) who have agreed to accept taxpayer referrals from an LITC and provide representation or consultation services free of charge to low-income or ESL taxpayers. Clinics may also use volunteers to assist with other tasks such as education, outreach, or mentoring students.

Program plan is a description of the clinic’s planned operations, including a description of the services to be offered; how, when, and where the services will be delivered; who will provide the services; the intended recipients of the services; and numerical goals. The terms and conditions of an LITC grant include the applicant’s program plan and any subsequent changes to the plan agreed upon between the Program Office and the clinic.

Qualified representative is:

n An attorney;

n A CPA;

n An EA authorized to practice before the IRS;

n An individual authorized to appear before the court where the controversy with the IRS will be adjudicated; or n An individual authorized to practice before the IRS pursuant to 31 Code of Federal Regulations (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). See Section VI.C.xii, Representing Low-Income Taxpayers, Representation by Students and Law Graduates.

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For individuals other than students or law graduates, the IRS Commissioner (or delegate) has the authority to issue special appearance authorizations to allow them to practice before the IRS. For students and law graduates, the Director of the LITC Program has the authority to issue special appearance authorizations; note, however, that the student or law graduate must be supervised by a qualified representative. See Delegation Order 25-18 (Rev. 4), (or successor), Internal Revenue Manual (IRM) 1.2.2.15.18.

NOTE: An unenrolled return preparer who can practice before the IRS based upon return preparation is not a qualified representative for 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. For details regarding limited practice before the IRS by individuals who are not attorneys, CPAs, or EAs, see Rev. Proc. 2014-42, 2014-29 I.R.B. 192.

Referral means the referral of low-income taxpayers to qualified representatives or to an LITC for representation.

Uniform Guidance refers to 2 CFR Part 200 (and the Treasury Department’s implementation thereof, found at 2 CFR Part 1000), which contains uniform administrative requirements that relate to the pre-award, post-award, closeout, and audit phases of the federal grant life cycle. See Section VI.D, National Policy Requirements and Administrative Requirements, for a more detailed discussion.

Additional terms and definitions are available in the Glossary.

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II. FEDERAL AWARD INFORMATION

A. AWARDS ARE SUBJECT TO CONGRESSIONAL APPROPRIATIONS

All awards are subject to the availability of appropriated funds. The IRS anticipates awarding LITC grants of up to $200,000 per year to qualifying organizations for the development, expansion, or continuation of an LITC.

Congress appropriated not less than $26 million for LITC grant awards for fiscal year 2023.8 Given the timing of appropriations, grant funds may not be made available to grant recipients until after the grant year has begun. The IRS also holds some of the annually appropriated funds in reserve so well-performing clinics that were not initially awarded the maximum award may ask for additional funds at mid-year. Figure 2 explains how the LITC Program receives its funding.

Figure 2, How the LITC Program Receives Its Funding

Step One

Step Two

Step Three

Step Four

Office of Management and Budget 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 between the first Monday in January and the first Monday in 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.

B. AWARD PERFORMANCE PERIOD

The LITC Program may award grants 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. Generally, first-time applicants will only be awarded a single-year grant. Multiyear grants will only be awarded to applicants that have successfully completed at least one year under the terms and conditions of the LITC grant unless the Notice of

8 Consolidated Appropriations Act, 2023, Pub. L. No. 117-328, Div. E (Dec. 29, 2022). Although funds are appropriated for a fiscal year, the Program Office awards grants on an annual basis.

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Funding Opportunity indicates otherwise. Determination of the grant period is at the discretion of the LITC Program Office. Thus, the Program Office may elect to award a single-year grant to applicants that requested a multiyear grant.

Multiyear grant recipients will be reviewed annually for satisfactory performance and progress in meeting goals and objectives and compliance with grant terms and conditions. The funding level for subsequent years will be reviewed annually and may be increased or decreased at the discretion of the LITC Program Office, based on performance, compliance with grant terms and conditions, and the availability of annually appropriated funds.

Funds awarded must be used for the program specifically authorized in the NOA.

C. SUBAWARDS ARE GENERALLY PROHIBITED

Generally, a clinic may not make a subaward of LITC grant funds to another organization or individual. A subaward is a payment to another organization or contractor to deliver a key component of the program such as controversy representation or ESL education. Subawards may be considered if the award of a subgrant is likely to assist a grant recipient with expanding coverage to an underserved or uncovered area. Use of a subaward must be proposed in the application and approved in writing by the Director of the LITC Program.