And then think how much worse it would be if you were low-income and not a native English speaker.
“A Latino client was told by the IRS that she had unreported income,” said Janice Shih, managing attorney of the Low-Income Taxpayer Clinic at the Maryland Volunteer Lawyers Service. “The IRS had received another 1099 which showed more income than she had claimed. As a result, the IRS assessed her with a higher income tax.”
But someone else had used her Social Security number, something not that unusual in the immigrant community, Shih said.
“The amount in controversy was around $3,000—quite a lot of money for a low-income person. We were able to resolve the issue for her.”
Because of clients like this, the IRS has mandated that its Low-Income Taxpayer Clinics expand their emphasis on English as a second language (ESL) speakers, who are at even more of a disadvantage with the complicated U.S. tax code.
That’s why MVLS has expanded its tax clinic, staffed by pro bono attorneys, to help non-native speakers and other low-income people who have tax disputes with the IRS and the state of Maryland.
MVLS has had a tax program since 1999. But nearly two decades later, the need for help is greater than ever.
“Staffing at the IRS has been decimated,” said MVLS Executive Director Bonnie Sullivan. “The agency used to have enough staff to help people fill out tax returns and to answer questions. Now it’s mostly automated.”
Low-income people are disproportionately affected by the decreased ability of the IRS to serve taxpayers, she added.
“Triggers on their returns such as Social Security numbers not matching and children claimed as dependents by both parents get caught by computers,” she said.
The tax clinic, which is funded by the IRS and MVLS fundraising revenue, helps about 150 people a year. The state of Maryland has two additional low-income taxpayer clinics at the two law schools staffed by student attorneys.
“All the cases we take are tax disputes and for income tax only,” Shih said. “We handle both federal and state controversies, which often come together. The one thing we don’t do is prepare tax returns.”
The amount in controversy can’t exceed $50,000 per tax year, which means the cases can be addressed in small tax case court. “It’s part of our agreement with our funder,” Shih said.
An upside of reaching out to low-income and ESL clients is that MVLS can tell them about a tax break.
“The Earned Income Tax Credit is very important,” Sullivan said. “It helps poor people build equity. A family can get up to $6,242, depending on the number of children, and a very low income person without children may also qualify. It offers significant savings to the taxpayer.”
The EITC is the largest welfare program in the federal budget, she added. “But it’s little understood by many, especially people who don’t speak English or speak it as a second language,” she said.
In addition to helping clients with tax disputes, the clinic assists pro se litigants with the U.S. Tax Court.
“The USTC has a traveling tax court that comes to Maryland several times a year,” Shih said. “We hold a pro bono day in conjunction with the law schools and the MSBA Tax Section and give advice to pro se litigants. We also provide brief advice to them at the court on the first day of trials.”
The tax court is receptive to the help and partners with the low income taxpayer clinics in getting the word out. “It’s an integral part of the success of our clinic,” Shih said.
Another focus is education.
“We do outreach to partner organizations like the Homeless Persons Representation Project, whose clients may have tax issues,” Shih said. “There’s also the International Rescue Committee, which helps refugees. We are also partnering with the local community colleges with ESL departments, such as Baltimore City Community College, to educate their immigrant students.
“We’re looking to help people with disputes with the IRS,” she added, “but we also inform them about the EITC and other tax issues like identity theft and tax preparer fraud.”
MVLS’ panel of pro bono attorneys includes many transactional lawyers.
“Transactional attorneys don’t want to get involved in family law cases,” Sullivan said. “So it’s a way for us to tap into a reservoir of lawyers who don’t usually get pro bono opportunities.”
“Tax troubles are all part of the constellation of consumer and financial predation that keeps poor people from ever becoming self-sufficient,” Sullivan said. “We find ways to help them build a life. When most of their income is going to IRS penalties or they’re socked with identity theft, it’s very difficult for them to get ahead.”
MVLS is offering a free tax controversy training for interested attorneys on Thursday, Sept. 15. For more information about the training or volunteering for the tax clinic, call Shih at 443-451-4061.
Joe Surkiewicz is director of communications at the Homeless Persons Representation Project in Baltimore. His email is [email protected].
To purchase a reprint of this column, contact The Daily Record.