Tax law issues arise in most areas of a poverty law practice. This guide covers federal tax issues that a general legal aid or pro bono attorney needs to know. It is not a guide for the legal aid or pro bono attorney who specializes in tax law1 . This guide will help you identify and understand tax issues that affect low-income taxpayers.
Low-income taxpayers often do not understand their tax obligations or may become victims of unscrupulous tax preparers. Collection actions, failure to file tax returns, debt cancellation income, audits of the Earned Income Credit, innocent spouse relief, and identity theft are the most common tax problems faced by low-income taxpayers.
The IRS is a powerful creditor whose collection actions can significantly affect the economic welfare of a low-income taxpayer. The IRS can garnish wages, pensions, Social Security benefits, and tax refunds. The IRS can seize bank accounts and other assets as well as file liens. The latest power given to the IRS is the ability to deny passports. The IRS can do all these things without seeking court permission.
- 1For a guide for tax specialists, see Am. Bar Ass’n, Effectively Representing Your Client Before the IRS (8th ed. 2021).