Print :

Independent Clinics

Low-Income Taxpayer Clinics: The Means to a Fairer Tax System

by Nina E. Olson

Nina E. Olson is the founder and former Executive Director of The Community Tax Law Project.  Ms. Olson currently is the IRS National Taxpayer Advocate.

This article is reprinted from The Community Tax Law Report, Vol. 3, No. 2 (Spring 1998) and provides historical context on the development of the federal Low-Income Taxpayer Clinic Grant Program.


The most significant taxpayer rights proposal in the recently passed IRS Restructuring and Reform Act of 1998 (H.R. 2676) is perhaps the least known one. Section 3601 of the bill provides for up to $6 million in federal matching funds for low income taxpayer clinics. It has long been recognized that a fundamental unfairness arises within a tax system where some parties to a dispute are denied access to professional representation. With the availability of federal clinic funding, then, many more taxpayers will reap the benefits of professional representation. They will be more likely to receive a full and fair hearing of their disputes and will also gain a much better understanding of the tax system and their rights within it. In light of these benefits, it stands to reason that bar associations, law and business schools, and public-spirited professionals will want to begin such programs in their locales.

The Restructuring legislation anticipates the creation of two types of clinics and funds two types of activities. Clinics must in general be (i) a student tax clinic at an accredited law or graduate business or accounting school or (ii) a tax-exempt organization providing representation to low income taxpayers (directly or through referrals to volunteers eligible to practice before the IRS). Only a nominal fee, if any, may be charged for such representation. Over 90 percent of the clients whose cases are accepted by qualified low income taxpayer clinics must have incomes at or below 250 percent of the federal poverty threshold. In addition to offering direct representation, clinics may also receive funding for providing tax education to individuals for whom English is a second language.

Student Tax Clinics

Historically, tax clinics began in the mid-seventies when several law schools established clinical programs for students interested in tax practice. Today, more than a dozen such clinics operate throughout the country at both law and accounting schools. Students receive special certification from the IRS enabling them to represent taxpayers before the Service. Law students with the appropriate academic credentials may be permitted to argue and conduct all or any part of a trial before the United States Tax Court. The students are required to be closely supervised by a faculty member. In Tax Court cases the faculty member, who is admitted to practice before the Court, enters his or her appearance as lead counsel for the petitioner. Recognition of student tax clinics by the Internal Revenue Service is governed by the Internal Revenue Manual (see IRM 6570 Chapter 17(00)).

While the principal goal of the student tax clinics is educational, student clinics serve an important role in encouraging young lawyers to contribute to the public good. Most of the cases they accept involve small deficiencies. Although the cost of litigating such a case might be prohibitive when compared to the proposed deficiency, the cases themselves raise legitimate and often fundamental issues. Thus, the public service aspect of student tax clinics cannot be overestimated. Some innovative student tax clinics have entered into relationships with local law firms whereby lawyers assist students on their cases and even accept overflow referrals of cases from the clinics on a pro bono basis.

In general, student tax clinics are expensive operations. They require one or more faculty members’ time for intensive teaching of perhaps only 6 or 7 students each semester. The parent educational institution must commit to providing a secretary, office space, stationery, computers and phone banks. Further, student tax clinics must satisfy administrative and curriculum requirements within the schools.

Faculty members interested in starting a law school clinic should first discuss it with their administration, other tax faculty, and faculty members operating other clinics at the school, not necessarily in that order. Once all internal requirements have been satisfied, the clinic should contact their local IRS district’s Taxpayer Education Specialist, who will forward the clinic’s application to the National Director of Practice. It is also a good idea to meet with the district-level division chiefs for Exam, Collections and Appeals if the clinic plans to accept cases in these practice areas. Law school clinics should call the Deputy Clerk of the Tax Court, who will direct the clinic to the appropriate Tax Court committee for program review. The law school will be expected to enter into a contract with the Court. This contract spells out the terms for qualifying students to represent taxpayers in Tax Court cases and also states that the Tax Court will notify pro se petitioners in small tax cases (“S” cases) or other cases in which less than $10,000 is in dispute, about the availability of the student clinic’s services. Finally, the IRS Assistant Chief Counsel (Field Services) and the clinic’s local district counsel should also be approached whenever Tax Court representation will be part of the clinic’s services. (Editor’s Note: a more detailed discussion of establishing and operating a student tax clinic will be published in the Fall 1998 issue of The Community Tax Law Report.)

Freestanding Nonprofit Clinics

Public service is the primary goal of the independent nonprofit clinic. While there may be many other justifications for it - training opportunities for associates, improvement of the profession’s public image - the nonprofit clinic is formed to provide tax professionals with pro bono opportunities to assist individuals or groups who could not otherwise obtain professional representation in tax disputes.

Nonprofit clinics may be associated with local or statewide bar or other professional organizations. They may also be formed as independent 501(c)(3) organizations. While an independent 501(c)(3) clinic has the most flexibility in setting case acceptance standards and in the scope of services provided, it suffers from the basic instability all nonprofits face with regard to start-up and ongoing funding.

A clinic may offer representation only in Tax Court “S” cases or it may extend its services to all federal, state and local tax matters. Some bar association programs recruit volunteer attorneys to attend calendar calls at Tax Court and offer free one or two hour consultations prior to trial. Although the attorneys do not enter an appearance on behalf of the taxpayer, they are able to advise the petitioners on the strengths of their cases, the likelihood of settlement and effective trial preparation and presentation.

A clinic may operate on a one-day-a-week walk-in basis, staffed by volunteer attorneys. (Saturday clinics at local food banks or churches are a good way to reach clients and pool resources.) Volunteer telephone “hotlines” for tax questions or a “blab TV” call-in show are other clinic approaches. Alternatively, prospective clients could call into an intake center and be given an appointment for a free, one-hour consultation with members of the pro bono panel. These clinic models require very little in the way of ongoing funding. Donated space and phone lines at professional association or firm offices will cover the most expensive budget items. Funds are thus needed only for brochures, voice mail, liability insurance and monthly telephone service.

The most comprehensive program is one modeled after the traditional legal aid society, with a staff attorney who conducts intake interviews and either accepts cases in-house or refers them to pro bono panel members. Needless to say, this model is by far the most expensive to operate. It is also the most effective because there is someone on the staff whose job is to interview and assist clients; thus taxpayers receive some professional assistance regardless of the availability of volunteers.

Starting an Independent Tax Clinic

Non-academic tax clinics can be surprisingly easy to start; conversely, they can run into unexpected obstacles along the way. The one essential element for any program is a core group of tax professionals who are committed to the idea of getting the program off the ground. Some members of this group should be experienced in tax controversy work while others should be long-standing members of the profession. Between them, this group should have the tenacity to refuse to take “no” for an answer and to bounce back with alternative solutions should one or anther proposal encounter resistance. This core group can sound out local or statewide professional groups for interest in sponsorship. (Indeed, the project may be proposed by a state bar tax section.)

The founding group will also contact the Deputy Clerk of the Tax Court for the specific requirements relating to the pro bono representation agreement with the Court. These requirements include the agreement that no fee shall accrue or be paid to individual attorneys accepting cases through the clinic program (other than costs), and that all volunteer attorneys are admitted to practice before the Court. Freestanding programs must designate an attorney admitted to Tax Court practice as the program supervisor. (Bar-affiliated programs need only describe the procedure that will ensure leadership continuity of a referral program.) The IRS Assistant Chief Counsel (Field Services) and local district counsel should be contacted early in the formation process. Contacts with the local district director and division chiefs are also appropriate at this time if the program plans to accept exam, appeals or collections cases.

Freestanding tax clinics will need to incorporate and obtain a letter ruling for tax exemption under I.R.C. § 501(c)(3). For liability reasons, clinics sponsored by professional associations may also decide to operate as entities separate from the sponsoring organization. Bar-sponsored programs and independent legal clinics should check their state codes for provisions regulating the licensing of legal aid societies and the offense of “barratry” (the exciting and stirring up of disputes).

Factors governing the selection of an independent organization’s board of directors include the member’s experience in tax controversy work, knowledge of the key players in the tax field, and the ability to be an effective fundraiser. Although some bar associations may be willing to commit start-up funds to the clinic, most clinics will have to supplement funding through outside fundraising among professional firms and the charitable giving sector. Fundraising is a daunting but vital task, since the proposed federal grants are premised upon matching funds (including in-kind contributions). Several publications and directories, published by national foundation organizations, list funding organizations and their priorities. These directories are often available at public libraries in searchable CD-ROM format. For example, one could search for organizations limiting giving in the clinic’s geographic region with an interest in access to justice and legal services. Members of the board should not hesitate to ask for assistance from the major professional firms in the community and from religious institutions. Although a direct mailing to tax professionals is costly and often not very productive in terms of absolute dollars, when coupled with recruitment and information materials, the end result may be numerous small contributions and many more volunteers. Finally, organizations should check their state’s fundraising and solicitation statutes and comply with any registration requirements thereunder.

All clinics, whether freestanding or affiliated with another organization, will be well-advised to obtain professional liability insurance and officers’ and directors’ liability coverage. As a rule, organizations operating a pro bono referral panel will want to obtain “primary” coverage. Under this policy, the volunteer attorney is first covered by the clinic’s policy and his/her personal liability policy will apply only after the clinic’s deductible and policy limits are reached. This coverage is important for solo practitioners and large firm practitioners alike. (In the latter case, large firms have very large deductibles. A secondary coverage policy, i.e., one kicking in after the professional’s own coverage is exhausted, could result in the volunteer or the organization having to come up with hard cash.) A program-based policy will also cover volunteer attorneys who do not have coverage—LLM students or academics, for example.

For legal clinics, inexpensive malpractice insurance, with a rider for officers’ and directors’ coverage, is available from the National Legal Aid and Defenders Association (NLADA). Since NLADA’s membership includes legal aid societies running pro bono panels, their policy is very broad (covering student interns, staff and professionals assisting the attorney in the pro bono representation). NLADA offers primary as well as secondary coverage. For further information, call or write NLADA Service Corporation, 1625 K Street NW, Suite 735, Washington DC 20006; phone (800) 725-4513.

Even the simplest walk-in volunteer clinic will have to give some thought to grievance procedures and data management. Grievance procedures should be established early on by the board of directors and clients should be advised that such procedures exist and from whom detailed instructions can be obtained. It is important to track case assignment and disposition information for several reasons. First, the clinic does not want to load up one or two volunteers with all the cases and fail to use other volunteers at all. It is amazing how this can happen without realizing it! Second, grantsmakers are always interested in the numbers of volunteers participating in the program and the amount of volunteer time donated per year. Finally, tracking the nature of the tax dispute, the issues presented, and the case disposition alert the clinic to trends in low income tax practice and help identify areas ripe for reform or for volunteer training.

Volunteer Recruiting and Training

The pro bono panel is the heart and soul of all non-academic tax clinic models. Recruitment of volunteers is not a one-time effort. It must be built into all of the clinic’s activities and continued on a regular basis over the life of the clinic. Even programs with paid professional representatives on their staff will need volunteers to supplement their services.

The clinic should develop a simple but comprehensive sign-up form. This sign-up sheet is a two-way communication, in which the clinic asks volunteers for their assistance and in turn lets them know that it wants to design a meaningful professional program in which their own expertise will be increased. This is an especially important point to make to new or non-tax volunteers who might be looking for training or who want to gain experience in tax controversy work.

The sign-up sheet should be designed so that the clinic receives the kind of assistance it needs. Volunteers select the types of cases they are interested in taking on a pro bono basis (e.g., audits, appeals, Tax Court, bankruptcy, collections). They should also estimate the amount of time they are able to donate to the clinic. An effective sign-up sheet will provide the clinic with valuable information about topics for volunteer training; which firms are willing to hold Saturday walk-in clinics; volunteer mentors; and tax firm library accessibility for solo or small firm volunteers. The sign-up sheet should be sent to tax professionals directly, through direct mail, reproduction in professional association newsletters, law and accounting firm in-house distribution channels, and state bar new admittees ceremonies. Some state bar associations have a policy permitting the free distribution of mailing lists to pro bono organizations so long as the mailing does not contain fundraising materials.

Plan to make personal contacts with the largest law and accounting firms in the area, including tax partners and managing partners. Many large law firms also have a partner designated to oversee and promote the firm’s pro bono activities. This person is almost always looking for new volunteer opportunities for the firm. State bar pro bono coordinators often have lists of key pro bono personnel for law firms. Again, the state bar pro bono coordinator should be consulted for other recruiting ideas. These people are true professionals and know the ins and outs of pro bono work. They will be delighted to give assistance and suggestions to start-up legal clinics.

Of course, a pro bono panel is only as good as its volunteers. Many volunteers may not have the actual experience in controversy work. In fact, they may be volunteering, in part, to gain that experience. Mentoring is one answer to the training problem. Another solution is to produce continuing education programs covering the types of representations and issues likely to be encountered by professionals representing low income taxpayers. Clinics should also develop a lending library of continuing education materials. Many professional CLE and CPE programs will donate materials or sell them to a clinic at half-price. Remember that training programs are a very effective recruitment tool.

Fortunately for us all, however, we do not have to reinvent the “training” wheel. The Low Income Taxpayers Committee of the ABA Section of Taxation is in the final stages of producing a Model Clinic Teaching Handbook. This Handbook is a comprehensive volume, written by seasoned practitioners and covering all aspects of federal tax controversy practice. The Handbook also includes detailed chapters on starting and operating a clinic program. The Handbook is slated for publication in late 1998. Call the ABA Section of Taxation at (202) 662-8670 or look for further information in future issues of The Report.

Tax Clinic Publicity

In order to obtain clients, the clinic must let the public know about its available services. Some programs will limit their services to attending Tax Court calendar calls or to “stuffer” notices in Tax Court notices of trial sent to pro se petitioners. Others will also negotiate with the local IRS district director to include a similar letter in exam notices. For those clinics who wish to do community outreach and make their services available to the greatest number of clients, there are several simple methods to publicize the clinic’s services.

First, the clinic should contact every legal aid society operating in its geographical region. Legal aid societies rarely have the staff expertise to handle tax controversies and are delighted to learn of a new client resource. Social service agencies, homeless shelters, food banks, AIDS clinics, housing offices, day labor employment agencies, interfaith councils, churches, local chapters of the NAACP, Hispanic and other ethnic organizations, Boys and Girls Clubs, agencies on aging, public libraries,—all of these organizations are possible referral sources.

Some states have a separate agency dedicated to promoting volunteerism among its residents. This department may maintain a list of “volunteer” agencies. A similar directory will be available from the local United Way. A clinic might consider calling an agency on this list and offer to speak about the Earned Income Credit at a meeting. Finally, clinics can get plenty of free advertising from the community services listing in phone books, from radio or newspaper interviews, or from cable TV spots.

A Personal Reflection

In rereading the foregoing materials, I am struck by how overwhelming and complicated it may seem to start a clinic. It may assist persons interested in starting a clinic if I recount my own experience with establishing such a program. Six years ago, in founding The Community Tax Law Project, I moved to a state in which I had no professional contacts. Yet the sheer force of a good idea captured many people’s attention and the program flourished. I first contacted the pro bono coordinator of the state bar, who was delighted to hear that a new opportunity would exist for a heretofore untapped pro bono resource—tax and business attorneys. She offered me her unflagging intellectual, administrative and moral support. She was also the Project’s greatest publicist on a statewide basis. At her suggestion I contacted the local legal aid society executive director, the pro bono partner of the state’s largest law firm, and the chair of the state bar tax section. The more people I spoke with, the more people they suggested I call. My first call to the district counsel was, of course, out-of-the-blue, and yet he enthusiastically spoke to me for 45 minutes about the project and is a great believer in our program. The program soon enjoyed the support of several Tax Court judges and members of the ABA Tax Section. From these contacts developed a first class board of directors, a panel of over 135 stellar volunteers across Virginia, referral agreements with the Tax Court and our IRS District, continuing education programs, student internships, and The Community Tax Law Report. We faced each challenge as it was presented to us and met new allies along the way. The only discouraging question during this time was, “Where will you get the money?” We’re still asking this question. But at least now we have a partial answer—matching funds from the federal government.

What I am really trying to say here is that the field is wide open. If you are interested in starting a program and need help, call me or any one of the people listed as clinic resources. Yes, it takes dedication, but at this point the idea of low income taxpayer representation is an accepted one. Here is a chance to really make a difference in people’s lives and to see how much help you’ve been actually reflected in their eyes. Frankly, pro bono work is an opportunity we professionals should embrace. Fortunately, no one needs to do this work alone anymore.

Now. Get out there. Call your friends and associates. Get started.