The Low-Income Tax Payer Clinic (LITC) assisted a disabled client in settling over $4,000 of federal income tax debt owed to the IRS. The client, a 51-year-old individual, had been audited in 2014 and a balance was assessed against him of $3,000. At the time of the audit, the client owned his own residential painting business and had enough income to afford a repayment plan. However, in 2018 he was in an automobile accident and became legally blind, resulting in his inability to continue his painting business. When the client contacted the LITC, he had not made any payments to the IRS in several years and was in danger of being levied. The LITC prepared and filed an Offer in Compromise with the IRS and was able to settle the $4,000 balance for only $20.

The LITC successfully assisted another client in responding to an IRS audit for the tax year 2021. The client, a 33-year-old father of three, received an audit letter from the IRS for the tax year 2021, which resulted in a hold of his expected $19,000 tax refund. The audit proposed to change his filing status from head of household to single, and also remove both his Earned Income Tax Credit (“EITC”) and Child Tax Credit (“CTC”) claimed on his 2021 return. The LITC worked with the client in gathering relevant personal and financial records and submitted a timely response to the IRS that challenged their proposed changes. The IRS reviewed all of the paperwork submitted and ultimately agreed to reverse their proposed changes. The client and his family received their $19,000 refund shortly thereafter.

The LITC aided another individual in removing several old federal tax liens from his property so that he could proceed with a planned real estate settlement. The client, a 67-year-old single man living in Perry County, entered into a contract to sell his land; however, a title search conducted prior to the settlement revealed that three federal tax liens totaling $43,000 still existed on the property. These liens were several decades old and should have been released, but no formal releases were ever filed with the prothonotary’s office, and thus, the real estate sale could not proceed until these liens were paid and/or removed. The LITC worked with both the IRS and the Perry County Prothonotary’s office in securing the necessary lien release forms. The lien releases were then filed with the Prothonotary, removed from the land records, and the client was able to proceed with the sale of his property.

For more information on Low Income Tax Payer Clinic, please go to https://www.midpenn.org/what-we-do/.