The Community Tax Law Project | Celebrating 15 Years

The Community Tax Law Project is celebrating 15 years of outstanding tax advocacy on behalf of Virginia's working poor. We would like to thank our pro bono volunteers and supporters for their generous contributions. This year, we are honoring several outstanding pro bono volunteers and law firms. Thank you for making a difference in the lives of thousands of hard working Virginia taxpayers.

CTLP's History

Our story began in December 1992, when CTLP was founded by Nina E. Olson, the current National Taxpayer Advocate. After operating an accounting and tax preparation firm for 16 years, Nina went on to receive her J.D. and then an L.L.M. degree in taxation.

Nina conceived of the organization after a conversation with a U.S. Tax Court judge in 1992. The judge heard a statistic that alarmed Nina -- 76 percent of the entire Tax Court docket was composed of pro se litigants, and 96 percent of the small claims court docket was pro se. Through her prior experience, Nina knew that many of these litigants were low income people who could not afford an attorney. She stated: "The low income taxpayer often ends his encounter with a tax agency or the judicial process feeling that he did not have an opportunity to obtain adequate representation and did not receive a fair hearing of his complaint. His conclusion that the tax system is stacked against the working poor leads to resentment and possible avoidance of that system."

The Community Tax Law Project was founded on the belief that a taxpayer's access to professional representation in tax disputes should not depend solely on his or her ability to pay for such services. Nina's vision was of an organization that would provide free legal representation to low income taxpayers in all areas of tax controversy representation, including exam, appeals, refund claims, litigation in the U.S. Tax Court, and tax collection cases.

Nina operated the organization on a shoestring and spent a good deal of effort convincing others of the importance of low income taxpayer representation and recruiting pro bono attorneys to take cases. It was difficult for the organization to achieve sufficient funding and Nina acknowledged that "tax is not a particularly sexy issue."

In 1998 Nina testified before the U.S. Congress about the plight of low income taxpayers. Congress authorized funding for the establishment of the low income taxpayer clinic (LITC) program that provides matching grants of up to $100,000 to law and business school clinics and other nonprofit organizations that provide pro bono legal assistance to low income people. In 1999, CTLP was one of the original 34 clinics chosen to receive funding from this program and in 2007, was one of 154 such clinics nationwide. CTLP was the first independent, low income taxpayer clinic in the nation and is a leader in the field of low income taxpayer representation.

CTLP expanded its representation to include formation of new nonprofit organizations and application for IRS tax-exempt rulings for Richmond area organizations whose charitable purpose assists low income individuals. In 2006, CTLP and its pro bono volunteers provided legal representation and brief advice to over 560 Virginia families, individuals and community based organizations. Without CTLP's help, these taxpayers would have nowhere else to turn.

As part of our 15th anniversary celebration, we invite you to help lay the foundation for our next 15 years. Please consider a special donation this year in celebration of CTLP's anniversary. Your gift will help ensure that all taxpayers are treated fairly and that no one will have to face complicated tax laws and the taxing bureaucracies alone.

CTLP's Clients

Since 1992, CTLP has assisted over 5,000 Virginia families and individuals with tax problems. How can low income people have tax problems? Why should we care about disputes involving such small amounts of tax? Who are the people we help and why are they deserving of free assistance? Although the tax problems faced by CTLP's clients may seem insignificant to some, they are very important to the low income people experiencing them. The amount of a refund that has been delayed by the IRS often is enough to pull a family out of poverty. CTLP successfully gets wrongfully withheld funds released so they can be spent on essentials, and that money is generally spent in the local community.

Taxes impact on one's ability to save and to earn, and on one's desire to work. Taxes affect one's relationship with family, co-workers, and friends, as well as one's willingness to participate in the larger society. In short, taxes have a direct impact on a person's quality of life and on that person's role in society. Consider the following case stories.

Approximately 40% of CTLP's cases involve family tax issues.

CTLP got Ms. G's account for two of the years placed in currently-not-collectible status. We are awaiting an appeals hearing for the third year. While Ms. G. is relieved she does not have to repay the money for the two years, she feels treated unfairly by the IRS because she is still out the amount the IRS had already taken back for the third year.

Ms. G is a single, 35-yr-old making $29,000 a year as the manager of a fast food restaurant. She shared her 3-bedroom mobile home with a teenaged cousin of whom she got custody in 2000, and she cared and supported as her own child. She also shared it with her 80-year-old ailing grandmother, whom she also cared for and supported.

Ms. G. timely filed her tax returns and received family tax credits and exemptions for her cousin and grandmother for four years. In 2005, the IRS audited her for three of those years, and her grandmother died of cancer. Because she did not save and therefore could not produce receipts for all household expenses, the IRS reversed her head of household filing status, exemptions and credits for her cousin. As she could not prove to the IRS' satisfaction that her grandmother was indeed her grandmother, the IRS also disallowed the exemption for her. Further, the IRS reversed Ms. G.'s charitable deduction because she lacked receipts for her weekly church donation and reversed her personal property tax payments for which she had, in fact, produced receipts. The IRS then assessed Ms. G. more than $6,000 in taxes and penalties for her supposed underpayment of taxes.

CTLP is seeing an increase in cancellation of debt (COD) income cases relating to mortgage foreclosures:

CTLP submitted documents showing that the taxpayers were insolvent at the time of the debt cancellation and filed an amended tax return correctly excluding the $55,000 from their income and erasing the tax debt. With CTLP's help, this couple had a tremendous burden lifted from their shoulders. They could now get on with their lives.

In 2005, Mr. & Mrs. Homeowner purchase a home for $225,000. In 2006, they are in a severe automobile accident which renders both of them unable to work and they fall behind on their mortgage payments. The lender forecloses on the home in 2007. At the time of foreclosure, they owe $220,000 on the home and the fair market value of their property is $165,000. Their lender issues them a 1099-C for $55,000 in COD income. They receive a letter from the IRS stating they owe taxes on the $55,000. They don't understand how their loss could be considered income.

Approximately 25% of CTLP's clients are elderly and/or disabled.

CTLP requested that Ms. H.'s IRS account be placed in currently-not-collectible status and submitted an offer in compromise to the state. Ms. H. is much calmer now that CTLP has helped her with a tax problem that she felt was not rightfully hers in the first place.

Ms. H. is 50 years old and suffers from bi-polar disorder and Alzheimer's disease. She has had two nervous breakdowns and is heavily medicated. Her sole income is a monthly SSDI benefit of $1022. When her father died in 2003, she inherited an IRA valued at $87,000. In this same year, she executed a power of attorney authorizing a longtime family friend to act for her in financial matters. He embezzled approximately $35,000 of her inheritance. As a result, she owes approximately $6,000 to the IRS and $3,000 to the Virginia Department of Taxation.

Honoring CTLP's Pro bono Volunteers

Throughout our history, The Community Tax Law Project and our clients have benefited from the tremendous generosity of our panel of pro bono attorneys, enrolled agents, and CPAs. The selflessness of Virginia's community of tax professionals is the heart and soul of our program on behalf of low income taxpayers.

If we could have our way, each of the 150-plus volunteers on our pro bono panel would receive an award that expresses our appreciation for the many hours of advice and advocacy provided to our clients. Each of you enjoys our highest regard and appreciation for your generosity and your commitment to the rights of low income taxpayers.

Please join with us as we recognize a few people who exemplify all that is best in Virginia's tax professionals.

Pro bono Volunteer of the Year

We have selected Tim for this particular distinction based on his outstanding effort in two very difficult cases in which he logged well over 100 hours of pro bono effort on behalf of his clients. One case involved a wrongful levy on an elderly taxpayer living on social security. The other case was one on which the IRS disallowed the earned income tax credit for a low income family. In both cases, there were complex procedural issues and difficulties with several levels of IRS officials that either did not understand the law or were unwilling to consider the facts. In one of the cases, Tim had to file a petition in U.S. Tax Court to resolve the case. He resolved the other case at the Appeals level. Thank you, Tim, for your expertise and patience working these cases and for helping these taxpayers get the results they deserved.

Honorable Mention

Outstanding Firms

Finally, for any pro bono activity to succeed, the firms which employ tax professionals must support the work of the individual tax professionals. CTLP has been fortunate to have formed partnerships with several firms whose commitment to giving back to their communities is particularly noteworthy. For 2007, three firms are recognized:

Each year, Virginia's tax professionals demonstrate their commitment to achieving justice and fairness for the working poor in our state and federal tax systems by their generous donation of time and expertise to CTLP's important work. The practitioners and firms we have selected to honor this year are representative of the commitment and generosity shared by all of CTLP's volunteers. Thank you for your outstanding service on behalf of Virginia's low income taxpayers.

CTLP Turns 15

Help Celebrate our 15th Anniversary