SUPPLEMENTARY INFORMATION:

Background

Pursuant to Internal Revenue Code (IRC) § 7526, the IRS will annually award up to $6,000,000 (unless otherwise provided by Congressional appropriation) to qualified organizations, subject to the limitations in the statute. The IRS will allow applicants to request up to $200,000 for the 2027 grant year. The IRS will also continue the ESL Education Program. For FY 2027, if Congress significantly reduces the overall amount of LITC grant funding or reduces the per-clinic funding cap, the IRS will adjust each grant recipient's award to reflect any limitations in place at that time.

For an applicant proposing to provide tax controversy representation, at least 90 percent of the taxpayers represented by the clinic must have incomes which do not exceed 250 percent of the federal poverty level as determined under criteria established by the Department of Health and Human Services. See 91 FR 1797 (Jan. 13, 2026). In addition, the amount in controversy for the tax year to which the controversy relates generally cannot exceed the amount specified in IRC § 7463 for eligibility for special small tax case procedures in the United States Tax Court currently $50,000. IRC § 7526(c)(5) requires clinics to provide dollar-for-dollar matching funds, which may consist of funds from other non-federal sources or contributions of volunteer time or donated goods. See IRS Pub. 3319 for additional details. An applicant who is planning to operate a program to inform ESL taxpayers about their taxpayer rights and responsibilities must have either a volunteer or a staff member designated as a Qualified Tax Expert, generally an attorney, enrolled agent or certified public accountant, to review and approve all educational material.

Mission Statement

Low Income Taxpayer Clinics ensure the fairness and integrity of the tax system for taxpayers who are low-income or ESL by providing pro bono representation on their behalf in tax disputes with the IRS; educating them about their rights and responsibilities as taxpayers; and identifying and advocating for issues that impact low-income and ESL taxpayers.

Type of Qualified Services an Organization Can Provide

IRC § 7526(b)(1)(A) authorizes the IRS to award grants to organizations that represent low-income taxpayers in controversies before the IRS or provide education to ESL taxpayers regarding their taxpayer rights and responsibilities.

Pursuant to the ESL Education Program, a grant may be awarded to an organization to operate a program to inform ESL taxpayers about their taxpayer rights and responsibilities under the IRC without the requirement to also provide tax controversy representation to low-income taxpayers. See IRS Pub. 3319 for examples of what constitutes a “clinic.” When completing the Form 13424-M in the LITC Portal an applicant will be able to select.

Selection Consideration

The IRS continues to expand access to clinic services through on-boarding new clinics and allowing for expanded service delivery models geared to reach areas where the IRS has been unable to attract qualified applicants. Special consideration will be given to applicants from the following states where there is no LITC physically located within the state: Hawaii, Kansas, Montana, Nevada, South Dakota, West Virginia, and Wisconsin. In addition, there are areas located within states where there is limited or no coverage: Arizona—Gila County, Florida—Glades County, Hardee County, Hendry County, Hernando County, Highlands, County, Indian River County, Martin County, Okeechobee County, Sumter County, Pennsylvania—Lehigh County, Northampton County, Tennessee—Fayette County, Lauderdale County, Tipton County.

As in prior years, the IRS will consider a variety of factors in determining whether to award a grant, including: (1) the number of taxpayers who will be assisted by the organization, including the number of low income and ESL taxpayers in that geographic area; (2) the existence of other LITCs assisting the same population of low-income and ESL taxpayers; (3) the quality of the program offered by the organization, including the qualifications of its administrators and qualified representatives, and its record in providing services to low-income taxpayers; (4) the reasonableness of the proposed budget; (5) the organization's compliance with all federal tax obligations (filing and payment); (6) the organization's compliance with all federal nontax monetary obligations (filing and payment); (7) whether debarment or suspension (31 CFR part 19) applies or whether the organization is otherwise excluded from or ineligible for a federal award; and (8) alternative funding sources available to the organization, including amounts received from other non-federal sources such as state, local, or private endowments and other unrestricted funding sources of the institution sponsoring the organization.

For programs where all or most of cases will be placed with volunteers the following will be considered: (1) the quality of the representatives (attorneys, certified public accountants, or enrolled agents who have agreed to accept taxpayer referrals from an LITC and provide representation or consultation services free of charge) and (2) the ability of the organization to monitor referrals and ensure that the pro bono representatives are handling the cases properly, including taking timely case actions and ensuring services are offered for free.

New applications that pass the eligibility screening process will then be subject to technical review. Details regarding the scoring process can be found in Publication 3319. An organization submitting a continuation request for the second or third year of a multi-year grant will be required to ( printed page 24645) submit a Continuation Request and will be subject to a streamlined screening process. Funding recommendations are made by the National Taxpayer Advocate and final approvals are secured from Treasury, Assistant Secretary for Management (ASM), or Treasury ASM designee.

The costs of preparing and submitting an application are the responsibility of each applicant. Applications may be released in response to Freedom of Information Act requests after any necessary redactions are made. Therefore, applicants must not include any individual taxpayer information. The IRS will notify each applicant in writing once funding decisions have been made.

91 FR 24643