PKG00250619-instructions.pdf

2020 Grant Application Package and Guidelines iLOW INCOME TAXPAYER CLINIC

TABLE OF CONTENTS

MAY 2019

DEAR PROSPECTIVE LOW INCOME TAXPAYER CLINIC GRANT APPLICANT:

I am pleased to announce the opening of the 2020 Low Income Taxpayer Clinic (LITC) grant application period, which runs from May 1 through June 17, 2019.

Under Internal Revenue Code (IRC) § 7526, the IRS 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 LITC matching grants and provides instructions about how to apply for a matching grant. Topics include:

nn Award eligibility requirements;

nn Other eligibility and compliance requirements;

nn Application and selection process;

nn Standards for operating an LITC;

nn Reporting responsibilities;

nn LITC Program Office responsibilities;

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

This publication, including the Appendices, 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 2020 LITC grants, we will continue to work toward the following program goals:

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 for one-year to three-year project periods.

To be considered for 2020 LITC Program grant funding, all Full Grant Applications and Non-Competing

Continuation (NCC) Requests must be submitted electronically by 11:59pm (ET) on June 17, 2019, via www.grants.gov or www.GrantSolutions.gov, respectively. The cost of preparing and submitting applications is the responsibility of each applicant. On May 15, 2019, the LITC Program Office is hosting a new applicant webinar for those interested in learning more about the application process. If interested http://www.grants.gov http://www.GrantSolutions.gov in attending, visit www.irs.gov/litc for more information, including confirmation of the date and a link to register for the session.

Starting with Full Grant Applications for the 2019 grant year, applicants were required to receive a minimum score during the technical evaluation to be considered further. Additional information about this change is found in Section V.A., Technical Evaluation of Full Grant Applications and Scoring Criteria.

The LITC Program Office will notify each applicant in November 2019 about whether it was selected to receive a matching grant for 2020. Applicants notified they have been selected to receive a 2020 grant award will be required to attend the Annual LITC Grantee Conference in December 2019, held in

Washington, DC.

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.

As I near my retirement from the IRS in the summer of 2019, I would like to express my appreciation for the hard work by LITC clinicians located across the United States. LITCs have impacted the lives of countless taxpayers, and I have no doubt clinicians will continue to ensure the fairness and integrity of the federal tax system for all taxpayers.

Sincerely, Nina E. Olson

National Taxpayer Advocate http://www.irs.gov/litc mailto:LITCProgramOffice@irs.gov iiiLOW INCOME TAXPAYER CLINIC

WHAT IS NEW THIS YEAR

Educational Activity in the Key Terms section has been augmented to discuss the preferred format and common attributes of an educational activity. In general, these programs are delivered to a live audience or live online webchats or electronic town halls with participants registering, signing in, or being counted and will allow for audience interaction with the presenter.

Form 13424-M has been revised. Specifically, the following changes were made:

nn The lettering and numbering of sections were revised;

nn Text was changed in several sections, to provide better clarity and to reduce confusion;

nn In the Civil Rights Review section, two yes or no questions were added; and nn Also in the Civil Rights Review section, the instructions were changed from being answered for the

LITC to being answered for the part of the organization that receives funding or where the LITC will be housed within the sponsoring organization.

Assurances and Certifications are now agreed to when signing up for or renewing the SAM (System for

Award Management) registration. The Office of Management and Budget (OMB) eliminated the Standard

Form 424-B. Some of the standard assurances are discussed in Section C. iv, infra.

Closeout procedures allow the Program Office to resolve de-obligations of $25 or less without the requirement for the grantee to execute new documents. See Section E. iv, infra.

Guidance on how to budget and bill under provisional indirect cost rate agreements (ICRA) has been added. See Section E. i, infra.

AVOIDING COMMON ERRORS

To assist you with the application process, the following is a list of errors commonly made by applicants.

Please double check your application to ensure you avoid these errors.

Standard Form 424 Applicants seeking approval of a multi-year program plan complete line 17b with the wrong end date.

Form 13424-M Applicants indicate a single audit was “Qualified” when it is actually “Unqualified or Unmodified.”

Form 13424-J No full time equivalent (FTE) is provided for staff on Form 13424-J or applicants fail to state how many hours per week is considered full-time.

There is no break-down of travel and training expenses into categories such as lodging, transportation, and meals and incidentals.

The Project Abstract does not include the four primary numerical goals and the Civil Rights information is not fully addressed.

Employer Identification Number (EIN) and Data Universal Numbering System (DUNS) Number Applicants fail to register early for an EIN and DUNS number when registering with SAM.gov. First-time registration with these groups is a multi-step process that can take more than eight weeks and must be completed before the application submission deadline.

Attachments The ICRA submitted by applicants is incomplete.

An incomplete copy of the single audit is submitted or no copy of the single audit is submitted when it is unavailable on the Audit Clearinghouse website.

http://SAM.gov vLOW INCOME TAXPAYER CLINIC

TABLE OF CONTENTS

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. Subgrants Are 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

(NCC) Requests

i. Determining Type of Application

ii. Completing and Submitting a Full Grant Application on Grants.gov

iii. Instructions for Completing Full Grant Application Forms

iv. Completing and Submitting an NCC Request on GrantSolutions.gov

v. Instructions for Completing NCC Request Forms

vi. Withdrawing Applications After Submission

C. System For Award Management (SAM) Registration Requirement and Unique Entity

Identifier

i. SAM.gov

ii. Employer Identification Number (EIN)

iii. DUNS Number

D. Submission Due Dates and Times

i. Due Date for LITC Full Grant Applications and NCC Requests

ii. Incomplete or Late LITC Full Grant Applications and NCC 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. OMB Audit Requirement

V. APPLICATION REVIEW

A. Technical Evaluation of Full Grant Applications and Scoring Criteria

B. LITC Program Office Evaluation of Full Grant Applications and NCC Requests, and Selection . . 31

i. LITC Program Office Evaluation

ii. Civil Rights Reviews

VI. AWARD ADMINISTRATION

A. Notification of Selection

B. Notice of Award

C. Administrative Requirements

i. Standards for Operating an LITC

ii. LITC Program Office Webinars

iii. Annual LITC Grantee Conference

iv. Developing a Community Outreach Plan

v. Building Community Partnerships

vi. Networking with Other LITCs

vii. Mentoring

viii. Technical Assistance Consultation

ix. Maintaining Client Confidentiality

x. Recruiting and Supervising Volunteers

xi. Recordkeeping and File Management

xii. Representing Low Income Taxpayers

xiii. Education

xiv. Advocacy

xv. Preparing Tax Returns and ITIN Applications

D. National Policy Requirements and Administrative Requirements

i. General Compliance

ii. Managing Grant Funds viiLOW INCOME TAXPAYER CLINIC

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 Close-Out

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

COMMON IRS AND FEDERAL GRANT ACRONYMS

GLOSSARY

INDEX

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, 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.grantsolutions.gov

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I. LITC PROGRAM DESCRIPTION

A. LITC GRANT PROGRAM PRIORITIES

LITCs Provide Representation, Education, and Advocacy

The mission of the Low Income Taxpayer Clinic (LITC) Program is to ensure the fairness and integrity of the federal tax system for all taxpayers, particularly for low income individuals and taxpayers for whom English is a second language (ESL).

LITC grantees must:

nn Represent individual low income taxpayers in controversies with the Internal Revenue Service (IRS);

nn Educate low income and ESL taxpayers about their rights and responsibilities as U.S. taxpayers;

nn Identify and advocate for issues that impact low income taxpayers;

nn Provide dollar-for-dollar matching funds; and nn Offer LITC services for free or for no more than a nominal fee.

In December 2015, Congress enacted the Taxpayer Bill of Rights (TBOR)1 in Internal Revenue Code (IRC) § 7803(a)(3), which requires the IRS Commissioner to ensure that employees of the IRS are familiar, and act in accordance, with taxpayer rights. The TBOR also educates taxpayers that they have rights; that knowledge, in turn, empowers taxpayers to assert those rights during their interactions with the IRS. One of the ten fundamental rights taxpayers have when dealing with the IRS is the right to retain representation,2 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 protects taxpayers’ rights by providing 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 the taxpayer’s ability to pay for representation.

Helping a taxpayer avoid a tax controversy through education and outreach is another essential function of LITCs. LITCs are required to educate taxpayers on their rights and responsibilities to help them understand the U.S. tax system, exercise their rights as taxpayers, and comply with their tax responsibilities. Learning is enhanced by LITCs providing an opportunity for taxpayers to ask questions and interact with clinic staff. Outreach activities may involve direct communication with taxpayers or be accomplished indirectly through other organizations or groups that assist low income and ESL taxpayers.

At least 90 percent of the taxpayers the LITC represents must be low income, meaning a taxpayer’s income does not exceed 250 percent of the Federal Poverty Guidelines. In addition, when an LITC represents a taxpayer, the dollar amount in controversy for any tax year generally must not exceed the amount specified in IRC § 7463 for eligibility for special small case procedures in the U.S. Tax Court (currently $50,000). See Section VI.C.xii, Representing Low Income Taxpayers, Low Income Taxpayers and the 90/250 Requirement. The IRS remains

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

2 See IRC § 7803(a)(3)(I).

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committed to achieving maximum access to representation for low income taxpayers under the terms of this grant program. Thus, in awarding 2020 LITC grants, we will continue striving to provide services to low income and ESL taxpayers in every state, the District of Columbia, and Puerto Rico.

Areas of Special Consideration

ARIZONA (Coconino and Gila counties), FLORIDA (Bay, Brevard, Citrus, Flagler, Gulf, Hernando, Holmes, Lake, Marion, Okaloosa, Orange, Osceola, Putnam, Seminole, Sumter, Volusia, Walton, and Washington counties), HAWAII, MONTANA, NEW YORK (Delaware, Dutchess, Orange, Putnam, Sullivan, and Ulster counites), NORTH DAKOTA, PENNSYLVANIA (Bradford, Cameron, Carbon, Clinton, Columbia, Lackawanna, Luzerne, Lycoming, McKean, Monroe, Montour, Northumberland, Pike, Potter, Snyder, and Sullivan counties), PUERTO RICO, WEST VIRGINIA, WYOMING

Figure 1, 2019 LITC Coverage by County

For 2019, there are several geographic areas without an LITC or with very limited coverage. Therefore, for the 2020 grant year, priority will be given to funding a qualifying applicant to open a clinic in a geographic area with no clinic or very limited coverage before adding a new clinic in a geographic area that already has a clinic.

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LITC PROGRAM DESCRIPTION

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Important Dates for 2019 LITC Grant Program

Application period May 1, 2019 – June 17, 2019

New Applicant Webinar May 15, 2019

Application review and evaluation June – October 2019

Notification of selection/non-selection November 2019

Annual LITC Grantee Conference December 2019

Grant year January 1, 2020 – December 31, 2020

Interim report due July 30, 2020

Year-End report due March 31, 2021

B. HISTORY OF THE LITC PROGRAM

As part of the IRS Restructuring and Reform Act of 1998,3 Congress enacted IRC § 7526 to authorize funding for the LITC grant program. The IRS created the LITC Program Office in 1999 to award and administer the grants and 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)).

In 1999, the IRS awarded grants totaling less than $1.5 million to 34 entities located in 18 states and the District of Columbia. The LITC Program Office’s history of recruiting efforts coupled with sound judgment in selecting federal grant recipients has fostered the growth of a nationwide network of independent organizations working towards a common purpose in their local communities. The maximum statutory award amount of $100,000 per grantee has remained constant since the creation of the program. Despite this limitation, our grantees have consistently delivered tremendous results. The program continues to expand coverage with new grantees annually.

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

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C. STATUTORY AUTHORITY TO FUND LITCs The authority to create low income taxpayer clinics 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

(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 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) 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.

D. KEY TERMS AND DEFINITIONS

90/250 requirement is the requirement that at least 90 percent of taxpayers whose cases are accepted by the clinic for representation during the grant year are low income taxpayers. See Section VI.C.xii, Representing Low Income Taxpayers.

Advocacy is zealously protecting the rights of low income and ESL taxpayers as U.S. taxpayers. Advocacy can occur on an individual or systemic basis. A substantial portion of LITC work is spent assisting clients with an IRS controversy to explore all possible options for relief, and to assist the clients in making a fully informed decision on how to proceed. Notwithstanding the unique nature of each taxpayer’s circumstances, similarly situated taxpayers experience similar problems with tax administration. Advocacy includes 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 National Taxpayer Advocate who can communicate the issues and proposed solutions to lawmakers and IRS administration in her Annual Reports to Congress.

Amount in controversy is the federal tax 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 an

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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 the amount in dispute for a single tax year. See Section VI.C.xii, Representing Low Income Taxpayers, Amount in Controversy Limit.

Cases are those which LITCs count and report in inventory when a taxpayer or married taxpayers retain the clinic to act in a representative capacity before the IRS or a federal court in a controversy and the clinic takes steps to address the controversy, including developing a plan for advocacy. If the clinic is representing a married couple, it is counted as one case.

Clinic. See the definition below of Low Income Taxpayer Clinic (LITC). Throughout this Publication, the terms clinic and LITC are used interchangeably.

Consultation encompasses a discussion with or correspondence to a taxpayer designed to address the client’s unique circumstances and involves an analysis that is tailored to the client’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 under the IRC. 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 the tax provisions of the Affordable Care Act, 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). 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, although it may include a state criminal matter. For example, a 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 expand the scope of the representation to include the state or local matter.

Educational activities (also referred to as a Program to Inform) are designed to inform ESL or low income taxpayers about their rights and responsibilities as taxpayers, as well as tax issues of significance to the intended audience and generally delivered in person. Educational activities may also include a workshop or free training for other organizations that assist low income or ESL taxpayers. 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). LITCs prepare and distribute materials in languages appropriate for the ESL communities they assist. Selecting education topics relevant to community needs and offering the presentations in languages commonly spoken in the community allows LITCs to reach taxpayers who otherwise might experience great difficulty communicating with the IRS. In general, these programs are delivered to a live audience, with participants registering, signing in, or being counted and will allow for audience interaction with the presenter.

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English as a Second Language (ESL) taxpayers are persons for whom English is not their first language. This includes taxpayers who speak minimal English, no English at all, and taxpayers who communicate using American Sign Language. These individuals may have additional burden understanding taxpayer rights and responsibilities and are a priority for LITC outreach efforts. ESL taxpayers who immigrate to the United States may come from countries where the tax systems operate in a much different fashion, and those arriving from countries with pervasive corruption may bring with them a mistrust of government institutions. They may be completely unfamiliar with the concept or process of filing a tax return, tax return terminology, or even maintaining a bank account.

Grants.gov is the government website where federal agencies post discretionary funding opportunities and grantees find and apply for them.

GrantSolutions is a comprehensive grant management system operated by the Grants Center of Excellence.

Grantees use GrantSolutions for accepting a Notice of Award, submitting reports, reporting changes, applying for Non-Competing Continuation (NCC) Requests, and de-obligating funds.

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

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 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.

Low Income Taxpayer Clinic (LITC) is 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 inform ESL individuals about their rights and responsibilities under the IRC. LITC are also referred to as clinics in this publication. 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 IRC; 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.

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.

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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 LITCs that involves effectively publicizing and promoting the clinic’s services regarding representation, education, and advocacy on behalf of low income taxpayers 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 with taxpayers or 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.iii, Developing a Community Outreach Plan. For new grantees, outreach plans should be completed in advance of the start of the period during which representation and other assistance will be offered.

Pro bono panel is 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.

Program plan is a description of a clinic’s planned operations, including a description of the services to be offered; how, when, and where the services will be delivered; the intended recipients of the services; and numerical goals.

Qualified representative is a person who is:

nn An attorney;

nn A Certified Public Accountant;

nn An Enrolled Agent who is authorized to practice before the IRS;

nn An individual authorized to appear before the applicable court where the controversy with the IRS will be adjudicated; or nn 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). See Section VI.C.xii, Representing Low Income Taxpayers, Representation by Students and Law Graduates.

For individuals other than students or law graduates, the Commissioner (or delegate) has the authority to issue Special Appearance Authorizations to allow them to practice before the IRS.

If the Director of the LITC Program Office has authorized a student or law graduate to practice before the IRS, the student or law graduate must be supervised by a qualified representative. See Delegation Order 25-18 (Rev. 2), IRM 1.2.52.19 (Sept. 9, 2015).

Note: 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.

Referral means the referral of low income taxpayers to a pro bono panel for representation or consultation. An LITC cannot receive a grant solely for referring taxpayers to other qualified representatives.

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Uniform Guidance refers to 2 CFR Part 200 (and also 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 grant life cycle. See Section D, National Policy, 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 may award LITC grants of up to $100,000 per year to qualifying organizations for the development, expansion, or continuation of an LITC.

Qualified organizations include, among others, academic institutions and nonprofit organizations throughout the U.S., which must meet the goals of the program to provide representation, education, and advocacy on behalf of low income and ESL taxpayers.

Congress appropriated $12 million for LITC grant awards for 2019,4 and the IRS awarded over $11.6 million in grants to 131 entities located in 46 states and the District of Columbia. The average award in 2019 was more than $88,000, with only the strongest programs receiving the maximum award of $100,000. The LITC Program has announced a supplemental funding opportunity, however, funding determinations will not be made until after June 1, 2019. Figure 2 explains how the LITC Program receives its funding.

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

4 See Consolidated Appropriations Act, Pub. L. No. 116-6, 113 Stat. 13 (2019).

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The major expenditures incurred by LITCs are personnel costs and fringe benefits paid to provide direct representation, education, and advocacy services to low income and ESL taxpayers. Grantees are prohibited from using matching funds to pay indirect expenses, including general overhead of the grantee.5 This ensures more program funds are spent on taxpayer representation, education, and advocacy rather than administrative costs.

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. First-time applicants will only be awarded a single-year grant. Multi-year grants will only be awarded to applicants that have successfully completed at least one year under the terms and conditions of the LITC grant. 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 multi-year grant.

Multi-year grant recipients will be reviewed annually for satisfactory performance and progress in meeting goals and objectives as well as 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 Notice of Award.

A new applicant seeking an LITC grant award for the first time, or a returning clinic whose LITC award period has ended, or will end on December 31, 2019, must submit a Full Grant Application. A recipient of an LITC grant entering the second or third year of a multi-year grant in 2020 must submit a Non-Competing Continuation (NCC) Request in lieu of a Full Grant Application. See Section IV, Application and Submission Process.

C. 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 deliver a key component of the program such as controversy representation or ESL education. This is different from payments made to a vendor or provider for providing goods and services to the grantee, which is permissible. For example, a grantee may not pay another organization to prepare and conduct its ESL educational activities; however, the clinic could pay a firm to translate its educational materials into another language or hire an interpreter to assist with delivery of education.

5 IRC § 7526(c)(5).

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D. LITC GRANTS ARE NOT COOPERATIVE AGREEMENTS

Funds awarded under IRC § 7526 create grant agreements rather than cooperative agreements between the recipient and the IRS. A cooperative agreement provides for substantial involvement between the federal awarding agency and the grant recipient in carrying out the activity contemplated by the federal award. While the LITC Program Office has numerous responsibilities in administering the grant and providing oversight and assistance to grantees, that involvement does not result in the formation of a cooperative agreement. See the definitions of “cooperative agreement” and “grant agreement” in 2 CFR § 200.24 and 2 CFR § 200.51 respectively for additional details.

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III. AWARD ELIGIBILITY REQUIREMENTS

Applicants that fail to satisfy the eligibility screening criteria described below will be notified and, in some circumstances, may be provided an opportunity to correct the problem. Those provided an opportunity must correct the problem in a timely manner or be eliminated from consideration. Applications that pass the eligibility screening will then undergo a technical evaluation. See Section V, Application Review.

A. ELIGIBLE APPLICANTS

To receive a grant pursuant to IRC § 7526, a clinic must represent low income taxpayers in controversies with the IRS and operate a program to inform ESL taxpayers about their rights and responsibilities under the IRC.

Examples of an eligible applicant include:

nn A clinical program at an accredited law, business, or accounting school in which students represent low income taxpayers in controversy with the IRS; 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 or operate a program to inform ESL taxpayers about their rights and responsibilities under the Internal Revenue Code.

B. REQUIREMENT TO PROVIDE MATCHING FUNDS EQUAL TO AWARD

IRC § 7526(c)(5) requires grantees to provide matching funds on a dollar-for-dollar basis for all federal funds awarded by the IRS. The matching funds requirement ensures that each LITC grant represents a financial partnership between the grantee and the federal government for the benefit of low income and ESL taxpayers.

The commitment of matching funds by the grantee leverages the federal funding investment so that an LITC can assist more taxpayers in need. Many programs provide matching funds in the form of cash or third-party in-kind contributions (e.g., time worked by volunteers) that far exceed the minimum. Only funds that are used in direct support of the LITC Program qualify as matching funds. See Section IV.E.iii, Meeting the Matching Funds Requirement.

C. OTHER ELIGIBILITY REQUIREMENTS

i. Using Grant Funds to Support Other Activities is Prohibited

An organization awarded an LITC grant may provide qualifying LITC services within a broader spectrum of activity. For example, a grantee may provide representation in nontax matters (e.g., landlord/tenant disputes) as well as representation in tax matters, provided 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, including properly allocated portions of indirect costs of the organization that support LITC grant activities.

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

An LITC may not charge more than a nominal fee for its services. 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 a clinic charges an amount that is not nominal and results in fewer taxpayers assisted, the goal of the program is not being achieved. 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.

Note: Reimbursement of actual costs incurred (e.g., photocopying, court costs, and expert witness fees) is not considered a fee and is therefore permitted.

iii. Compliance With Federal Tax and Nontax Requirements

Federal Tax Debts The IRS is prohibited from awarding an LITC grant to an applicant that is noncompliant with a federal tax return filing or payment obligation. Consequently, an applicant must be in full compliance with its federal tax responsibilities when applying for an LITC grant and throughout the grant year. As a result, Standard Form 424, Application for Federal Assistance, (see Appendix) asks whether the applicant is delinquent on any federal debt and if so, to provide an explanation. The LITC Program Office conducts reviews to confirm applicants’ compliance with federal tax responsibilities and other terms and conditions of the grant. See C.i, Using Grant Funds to Support Other Activities is Prohibited, supra.

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 recipient will not be treated as noncompliant for purposes of IRC § 7526 (and therefore still eligible for funding) if the applicant or grant recipient is in a dispute with the IRS regarding a federal tax liability or has entered into and remains current with an installment agreement or other payment arrangement with the federal government to satisfy any federal tax liabilities.

IRC § 6103 prohibits the LITC Program Office from disclosing a federal tax compliance issue to anyone who is not authorized to receive the taxpayer’s tax information. Therefore, to facilitate the resolution of any potential federal tax compliance issues, Form 13424, Low Income Taxpayer Clinic (LITC) Application Information, requires applicants to provide contact information for the Tax Compliance Officer (TCO), who is the individual responsible for handling the organization’s federal tax matters. Some applicants are part of a larger organization (e.g., academic institution which operates a clinic), in which case the LITC Program Office must be able to verify that the sponsoring organization does not have a federal tax compliance issue before awarding grant funds.

Applicants must also provide documentation (e.g., articles of organization or a Form 2848, Power of Attorney and Declaration of Representative) which shows how the applicant on Form 13424 is properly authorized to receive tax information to prevent the IRS from making an unauthorized disclosure.

Complying with federal tax obligations is a requirement to receive an LITC grant, so it is imperative that the designated individual be knowledgeable and prepared to promptly address any federal tax issues of the applicant or the sponsoring organization. Failure to provide an appropriate contact could delay application processing in the event the LITC Program Office identifies a federal tax compliance issue of the applicant or its sponsoring organization and needs to discuss the issue further. In addition, if the LITC Program Office is unable to

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speak with the appropriate contact to ascertain the status of the organization’s efforts to address the federal tax compliance issue, no grant funds will be awarded to the applicant. Similarly, even after grant funds have been awarded, the LITC Program Office performs tax compliance checks throughout the grant year. Without an appropriate contact with whom the LITC Program Office can discuss a tax compliance issue, in the event a tax compliance issue arises during the grant year, the LITC Program Office may need to freeze the clinic’s funds.

Federal Nontax Requirements In general, the IRS will not award an LITC grant to an applicant that is noncompliant with a federal nontax filing or payment obligation. An outstanding federal nontax obligation is an unpaid federal debt (other than a federal tax obligation) that has been assessed, is not disputed, and for which all administrative and judicial remedies have been exhausted or have lapsed. An applicant or grant recipient will not be treated as noncompliant for purposes of IRC § 7526 (and therefore still eligible for funding) if the applicant or grant recipient is in a dispute with the federal government regarding a federal nontax liability or has entered into and remains current with an installment agreement or other payment arrangement with the federal government to satisfy any outstanding federal nontax obligations. The LITC Program Office utilizes SAM to determine ineligible grant recipients and prevent improper payments. See Section C.i, Using Grant Funds to Support Other Activities is Prohibited, supra.

iv. Debarment and Suspension

When applying for a grant, applicants are required to make certain certifications and provide certain assurances.

One of these certifications is the Certification Regarding Debarment, Suspension, and Other Responsibility Matters — Primary Covered Transactions. 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.