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As March Madness basketball brackets dominate our screens, it’s hard not to think about the 68 teams involved in the tournament. This number also mirrors the 68 provisions in the Taxpayer Assistance and Service (or “TAS”) Act, a significant discussion draft aimed at improving tax administration.
Among these provisions, one in particular stands out as familiar for its potential to help vulnerable taxpayers. Section 110 of the draft TAS Act would unlock the funding restrictions for the Low Income Taxpayer Clinic (LITC) Program. This reform would be a slam dunk for taxpayer rights and ensure that low-income taxpayers get the professional representation and assistance they deserve in tax disputes.
Congress created the LITC Program under IRC § 7526 to fill a void and ensure that low-income taxpayers have access to free or low-cost legal services when dealing with IRS tax controversies. For 25 years, the LITC Program has done just that. It has positively impacted underserved taxpayers consistent with its mission to help ensure fairness, access, and advocacy within our complex tax system. LITCs are often run by law schools, nonprofit organizations, and legal service groups across the United States. These clinics offer a wide range of services, from professional representation before the IRS to legal consultation for tax issues such as audits, collections, appeals, and litigation. They also help taxpayers avoid or resolve tax problems, ensuring their rights are protected throughout the process.
The LITC Program had an impressive stat line last year. In 2024, LITC grants were awarded to 138 organizations, aiding over 20,000 taxpayers. These clinics also provided consultations to an additional 17,000 taxpayers. The success of the LITC Program is tied largely to the extensive use of volunteers. Over 1,500 volunteers contributed to the success of LITCs by volunteering about 42,000 hours of their time. Last year, the clinics helped correct over $40 million in taxpayer liabilities and secured over $11 million in tax refunds for taxpayers.
LITCs play a crucial role in promoting fairness, access, and justice in our tax system.
Despite its success, the LITC Program faces significant funding constraints. Current law imposes a cap on the total amount of annual grants available to the program, limiting the maximum amount any clinic can receive to just $100,000 per year. Additionally, clinics must match each LITC grant dollar that it receives, meaning it must secure another $100,000 from external funding donations or like-kind services such as professional pro bono work to fully utilize the grant. The 100 percent matching funds requirement in some cases serves as a barrier to coverage.
While many LITCs operate with larger budgets, they often struggle to secure the necessary supplemental funds to meet the matching requirement and cover operational costs. These financial constraints can prevent some organizations in underserved communities from establishing LITCs, and they may even lead others to depart from the program altogether. As a result, many potential beneficiaries of LITC services, low-income taxpayers facing complex IRS tax issues, are left without access to the professional help they need. That is, until the TAS Act… possibly.
As Section 110’s title indicates, the draft TAS Act proposes to unlock those LITC funding restrictions. Unlocking the restrictions should unlock the LITC Program’s potential by enabling it to assist and protect the rights of more taxpayers in tax controversies with the IRS. Historically, the cap and the dollar-for-dollar matching requirement have in some cases made it more difficult to operate robust LITC clinics that can meet taxpayer demand. Sometimes clinics must secure and rely on funds not only for the matching requirement, but for basic operational costs when those costs exceed what the LITC grant can cover.
The discussion draft of the TAS Act would remove the rigid grant cap and replace the 100 percent matching requirement with greater flexibility. Specifically, the Secretary of the Treasury would be authorized to reduce the matching requirement down to 25 percent if doing so would expand LITC coverage to more taxpayers. By unlocking these funding restrictions, Section 110 would give LITCs the ability to better serve low-income taxpayers allowing them to focus on delivering high-quality service to more people. The flexibility to lower the matching requirement would also help clinics in underserved areas where external funding necessary to continue their essential work may be particularly difficult to obtain.
In short, this reform would empower LITCs to expand their services, helping more taxpayers successfully navigate their IRS challenges.
Every taxpayer deserves the same fundamental taxpayer rights, including the rights to retain representation and to a fair and just tax system. By removing the financial barriers that currently limit the LITC program, Section 110 of the draft TAS Act would significantly expand the number of taxpayers it serves. More taxpayers would receive professional assistance in resolving their tax controversies, helping to ensure their rights are protected.
In the world of March Madness, only one team out of 68 can claim the championship. But in the realm of tax reform, the discussion draft of the TAS Act has the potential to be the real winner for taxpayer rights. With provisions like Section 110, it could unlock a better future for low-income taxpayers who need our support the most. Section 110’s inclusion in the discussion draft of the TAS Act provides optimism that this important piece of legislation becomes a championship banner that hangs in the arena of tax justice.
The views expressed in this blog are solely those of the National Taxpayer Advocate. The National Taxpayer Advocate presents an independent taxpayer perspective that does not necessarily reflect the position of the IRS, the Treasury Department, or the Office of Management and Budget.
