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Attached to: Low Income Taxpayer Clinic
Opportunity number: TREAS-GRANTS-052019-002
Issued by: Department of the Treasury

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LITC LOW INCOME

TAXPAYER CLINICS

Representation • Education • Advocacy

2019 Grant Application Package and Guidelines iLOW INCOME TAXPAYER CLINIC

TABLE OF CONTENTS

MAY 2018

DEAR PROSPECTIVE LOW INCOME TAXPAYER CLINIC GRANT APPLICANT:

I am pleased to announce the opening of the 2019 Low Income Taxpayer Clinic (LITC) grant application period, which runs from May 16 through June 27, 2018.

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 a Low Income Taxpayer Clinic operation;

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 2019 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 2019 LITC Program grant funding, all Full Grant Applications and Non-Competing

Continuation (NCC) Requests must be submitted electronically by 11:59pm (EST) on June 27, 2018, via www.grants.gov or www.grantsolutions.gov, respectively. The cost of preparing and submitting applications is the responsibility of each applicant.

http://www.grants.gov http://www.grantsolutions.gov

Starting with Full Grant Applications in 2019, applicants must 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 2018 about whether it was selected to receive a matching grant for 2019. Applicants notified they have been selected to receive a 2019 grant award must attend the Annual LITC Grantee Conference in December 2018, held in Washington, D.C.

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

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

I appreciate your interest in the LITC Program and look forward to working with the 2019 LITC grantees to ensure the fairness and integrity of federal tax administration.

Sincerely, Nina E. Olson

National Taxpayer Advocate mailto:LITCProgramOffice@irs.gov iiiLOW 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. System for Award Management (SAM.gov)

ii. Employer Identification Number (EIN)

iii. Data Universal Numbering System (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 . . 30

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. Annual LITC Grantee Conference

iii. Developing a Community Outreach Plan

iv. Building Community Partnerships

v. Networking with Other LITCs

vi. Mentoring

vii. Technical Assistance Consultation

viii. Maintaining Client Confidentiality

ix. Recruiting and Supervising Volunteers

x. Recordkeeping and File Management

xi. Representing Low Income Taxpayers

xii. Education

xiii. Advocacy

xiv. Preparing Tax Returns and ITIN Applications

D. National Policy Requirements

i. General Compliance

ii. Managing Grant Funds

iii. Lobbying Restrictions vLOW INCOME TAXPAYER CLINIC

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 SUSPENSION OR TERMINATION

APPENDIX A

APPENDIX B

COMMONLY USED 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.grants.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 those like 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 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 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 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 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.xi, Representing Low Income Taxpayers, Low Income Taxpayers and the 90/250 Rule.

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

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

2 LOW INCOME TAXPAYER CLINIC

Areas of Special Consideration

Hawaii, North Dakota, Puerto Rico, mid-Florida, northeast Arizona, northern Pennsylvania, and southeast New York (not including boroughs of New York City).

Important Dates for 2019 LITC Grant Program

Application period May 16 – June 27, 2018

Application review and evaluation June – October 2018

Notification of selection/non-selection November 2018

Annual LITC Grantee Conference Early December 2018

Grant year January 1, 2019 – December 31, 2019

Interim report due July 30, 2019

Year-End report due April 1, 2020

B. HISTORY OF THE LITC PROGRAM

As part of the Internal Revenue Service Restructuring and Reform Act of 19983 (RRA 98), Congress enacted IRC § 7526 to authorize funding for the LITC grant program. The IRS created the LITC Program Office in 1999 to provide guidance, assistance, and oversight to LITC grantees and prospective applicants. The LITC Program Office is part of the Office of the Taxpayer Advocate (commonly referred to as the Taxpayer Advocate Service (TAS)).

3 See Public Law 105-206, § 3601, 112 Stat. 685, 774 (July 22, 1998).

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LITC PROGRAM DESCRIPTION

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Figure 1, 2018 LITC Coverage by County

WVMO

MDCO

INIL

WVMO

MDCO

INIL

LITC Service Covered

Not Covered

AKAK

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. In 2018, the IRS awarded over $11,800,000 in grants to 134 grantees located in 48 states and the District of Columbia.

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. Twenty-two of the 34 organizations that received an award in the first year of the LITC Program are still with the program today;

however, new organizations apply for and are awarded LITC grants annually.

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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 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.

(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

Advocacy means zealously protecting the rights of low income and ESL taxpayers as United States 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 issue, or elevates the issue to the National Taxpayer Advocate who can communicate those issues and proposed solutions to lawmakers and IRS administration in her Annual Report to Congress.

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

Whether interest is included in the amount in controversy will depend on the nature of the controversy. Further, the amount in controversy is limited to the amount in dispute, which may be less than the amount specified in a statutory notice of deficiency, 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.xi Representing Low Income Taxpayers, Amount in Controversy Limit.

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Cases are counted and reported in inventory when a taxpayer retains 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.

Consultation means a discussion with a taxpayer designed to provide advice or counsel about a specific tax matter that does not result in representation of the taxpayer (opening a case). This would include fact gathering and contact with the IRS that does not rise to the level of advocacy.

Controversy with the IRS means a proceeding brought by the taxpayer under Title 26 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 section 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 are programs designed to inform ESL or low income taxpayers about their rights and responsibilities as taxpayers, as well as tax issues of particular significance to the intended audience 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.

English as a Second Language (ESL) taxpayers are persons for whom English is not the first language. This group may have additional burden understanding taxpayer rights and responsibilities and is 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 process of filing a tax return 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.

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

Grantees use Grant Solutions to take all actions regarding their grant (except for drawing down 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, 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, as determined in accordance with official guidance published by the federal government. Low income status is determined by reference to the Federal Poverty Guidelines, which are updated annually (usually in late January) by the Department of Health and Human Services (HHS). The current LITC Income Guidelines can be found in Section VI.C.xi, Representing Low Income Taxpayers.

A sole proprietor is considered an individual and may be assisted 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) means an organization receiving a grant pursuant to IRC § 7526 that represents low income taxpayers in controversies with the IRS and that operates a program to educate ESL individuals about their rights and responsibilities under the Internal Revenue Code. The term LITC generally includes a clinical program at an accredited law, business, or accounting school in which students assist in the delivery of services, as well as an organization described in IRC § 501(c) and exempt from tax under IRC § 501(a).

Nominal fee means a fee that is insignificantly small or minimal. A nominal fee is a trivial payment, bearing no relation to the value of the representation provided, 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. If an LITC charges any taxpayer a nominal fee for services, it must charge the same fee to all taxpayers. A nominal fee does not include reimbursement for actual costs incurred (e.g., photocopies, court costs, and expert witness fees).

Outreach means an activity conducted by LITCs that involves effectively publicizing and promoting the clinic’s services, including representation, education, and advocacy on behalf of low income taxpayers and ESL taxpayers.

LITCs are encouraged to identify particular 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.

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

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

Program to educate means an activity intended to educate taxpayers about their rights and responsibilities under the IRC, with a focus on issues impacting low income and ESL taxpayers. See Section VI.C.xii, Education.

Qualified representative means 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.xi., 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 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.

A detailed list of 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. In making grant award decisions, the IRS seeks to fund qualified organizations, including academic institutions and nonprofit organizations throughout the United States, to provide representation, education, and advocacy on behalf of low income and ESL taxpayers. The IRS awards grant funds to achieve the goals of the LITC Program.

Congress appropriated $12 million for LITC grant awards for 2018, and the IRS awarded over $11.8 million in grants to 134 entities located in 48 states and the District of Columbia. The average award in 2017 was more than $86,000, with only the strongest programs receiving the maximum award of $100,000. 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.

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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.

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.4 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 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 recipients will be reviewed annually for satisfactory performance and progress in meeting goals and objectives as well as compliance with grant terms. The funding level for subsequent years will be reviewed annually and may be increased or decreased at the discretion of the IRS, 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, 2018, must submit a Full Grant Application. A recipient of an LITC grant entering the second or third year of a multi-year grant in 2019 must submit an 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 provide controversy representation or ESL education as compared to a payment for providing goods and services to the grantee. For example, a grantee may not pay another organization to prepare and conduct its ESL educational activities, although the clinic could pay a firm to translate its educational materials into another language.

4 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 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 educate 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 assist in service delivery; and nn An organization described in IRC § 501(c) and exempt from tax under IRC § 501(a) in which employees and volunteers in service delivery represent low income taxpayers in controversies with the IRS.

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, yet 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 funded with 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 results in fewer taxpayers assisted, the goal of the Program is not being achieved and that amount is not nominal. A clinic may not charge a separate or additional fee (even if it is nominal) to prepare a tax return or a claim for refund.

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 (Appendix) asks whether the applicant is delinquent on any federal debt.

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, Standard Form 424, Application for Federal Assistance (specifically the Applicant Federal Debt Delinquency Explanation), and Form 13424, Low Income Taxpayer Clinic (LITC) Application Information, require applicants to provide contact information for the individual responsible for handling the organization’s federal tax matters. 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 such individual referred to as a Tax Compliance Officer 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 clinic 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 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.

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An outstanding federal tax debt is any unpaid federal tax liability (including penalties and interest) that has been assessed, is not disputed, and for which all judicial and administrative remedies have been exhausted or have lapsed. An applicant or grant 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.

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 IRS 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 the System for Award Management (SAM) to determine ineligible grant recipients and prevent improper payments.

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. Applicants may check this before applying by visiting SAM.gov. If an applicant identifies incorrect information about the organization or individuals within the organization, the applicant should contact the agency that reported the information.

http://SAM.gov

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IV. APPLICATION AND SUBMISSION PROCESS

A. ACCESSING THE LITC GRANT APPLICATION PACKAGE AND GUIDELINES

A copy of this guide can be downloaded from www.irs.gov/pub/irs-pdf/p3319.pdf or you can request a copy be mailed to you. For information about ordering IRS Publications, including this one, visit www.irs.gov/forms-pubs/forms-and-publications-by-us-mail.

Preparing and submitting your grant application is a major undertaking. Take time to understand and review the process well in advance of the application submission deadline. Prepare and start as early as possible. Completing the required registrations for the first time is a multi-step process that can take more than eight weeks and MUST be completed before the application submission deadline. See Section IV.C.i, System for Award Management for steps that should be taken as early in the application process as is possible.

B. REQUIRED CONTENT FOR LITC FULL GRANT APPLICATIONS AND

NON-COMPETING CONTINUATION (NCC) REQUESTS

i. Determining Type of Application

There are two types of LITC grant applications: LITC Full Grant Applications and NCC Requests.

nn 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, 2018, must submit a Full Grant Application to apply for 2019 funding. See Section IV.B.ii, Completing and Submitting a Full Grant Application Package on Grants.gov.

nn A returning clinic funded with a multi-year LITC grant that ends after December 31, 2018, must submit an NCC Request to be considered for 2019 funding. See Section IV.B.iv, Completing and Submitting an NCC Request on Grantsolutions.gov.

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

LITC Full Grant Applications must be submitted electronically via www.grants.gov. The submission system on grants.gov provides free access to the necessary forms required to complete an application and notifies applicants if any fields were left blank where a response is required. The grants.gov website includes a narrated tutorial and Frequently Asked Questions to help you use the system. Applicants will receive an email confirmation from grants.gov that serves as acknowledgement of application submission.

The Funding Opportunity Number for the 2019 LITC Grant Application is TREAS-GRANTS-052019-001.

https://www.irs.gov/pub/irs-pdf/p3319.pdf https://www.irs.gov/forms-pubs/forms-and-publications-by-us-mail http://grants.gov

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iii. Instructions for Completing Full Grant Application Forms

Appendix A of this publication is a useful guide for completing each of the required application forms. The Office of Management and Budget (OMB) requires certain standard forms for use in all federal grant programs.

The IRS also requires forms be completed specifically for an LITC grant. To assist applicants in completing the required forms, the appendix includes screen shots and instructions for completing the forms, as well as examples.

A complete Full Grant Application consists of the following items, submitted through www.grants.gov and prepared in accordance with the relevant instructions.

a. Standard Form 424, Application for Federal Assistance;

b. Standard Form 424A, Budget Information – Non-Construction Programs;

c. IRS Form 13424, Low Income Taxpayer Clinic (LITC) Application Information;

d. IRS Form 13424-J, Detailed Budget Worksheet and Narrative;

e. IRS Form 13424-M, Low Income Taxpayer Clinic (LITC) Application Narrative; and

f. Attachments Form (used to attach the following items):

nn Tax exemption determination letter, if applicable;* nn Proof of academic accreditation, if applicable;* nn Most recent audited financial statement (if the applicant expends $750,000 or more in federal funds during the applicant’s fiscal year, this must be a single audit or program-specific audit as defined in 2 CFR § 200.501.) If the applicant’s most recent audited financial statement is available on the Federal Audit Clearinghouse found at harvester.census.gov/facweb/ then in lieu of attaching the audit, please indicate in an attached statement that it is available on the clearinghouse site (See Section IV.E.iv, OMB Audit Requirement); * nn An applicant that does not have audited financial statements must submit unaudited statements for its most recent fiscal year and a statement as to why audited financial statements are not available;* nn Applicants must also provide documentation (e.g., articles of organization or a Form 2848) which shows that the designated Tax Compliance Officer on Form 13424 is properly authorized to receive tax infor-mation; and nn Indirect cost rate agreement, if applicable.*

* Items marked with an asterisk must be submitted via the Attachments Form (which is incorporated into the downloadable PDF from www.grants.gov).

Please note that the current online version of Form 13424-M does not include a place to respond to the following request for Civil Rights Statements:

nn A description of how the needs of individuals with limited English proficiency (LEP) or individuals who may need a reasonable accommodation will be addressed in order to access services;

nn A statement that all required records will be compiled and maintained, as appropriate, by the applicant according to the agency’s guidelines; and http://www.grants.gov https://harvester.census.gov/facweb/

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nn A statement that the applicant agrees to display Publication 4053, Civil Rights Poster (provided to by the Internal Revenue Service).

Successful applicants will be asked to address the statements in the Application Amendment. Section VI.E, Reporting Responsibilities, Completing the Application Amendment Package.

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

A returning clinic funded with a multi-year LITC grant that ends after December 31, 2018, must submit an NCC Request. All NCC Requests must be submitted via www.grantsolutions.gov.

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