Low Income Taxpayer Clinic

Vermont Legal Aid’s Low Income Taxpayer Clinic (LITC):

  • provides free or low-cost assistance to low income taxpayers who have a tax dispute with the IRS about an audit, tax debt, levy or lien
  • offers education and outreach events and materials to help taxpayers understand their tax responsibilities and to get benefits (like the Earned Income Tax Credit) that they may qualify for
  • speaks up for low income taxpayers and suggests changes to rules that cause clients economic hardship

While the LITC gets funding from the IRS to provide these services, the LITC is not part of the IRS.

IRS Computer Error Leads to $200,000 Tax Bill

Luis and Maria’s tax problems started when Luis received a handwritten 1099, a tax form showing an amount paid to Luis’ landscaping business. The IRS computer misread the form and added two zeroes to Luis’ income.

Because of this simple error, which Luis and Maria had tried for years to correct, they owed over $200,000 in state and federal income tax liabilities, penalties, and interest.

Luis had submitted a corrected form and several letters from the business that gave him the 1099 to prove the error, but the letters were not clear enough to satisfy the IRS.

VLA’s Low Income Taxpayer Clinic worked with the business to get proof of the error that the IRS would accept and asked the IRS to reconsider the audit. Less than two months later, the huge tax bill was finally cleared.

 
Name(s) and some details have been changed to protect anonymity and confidentiality. 

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