Treasury Inspector General for Tax Administration
August 3, 2011
TIGTA - 2011-44
Contact: Karen Kraushaar
WASHINGTON – The Taxpayer Advocate Service (TAS) can take additional actions to ensure that the Federal funds it provides to Low Income Taxpayer Clinics are used appropriately, according to a new study publicly released by the Treasury Inspector General for Tax Administration (TIGTA).
The goal of the Low Income Taxpayer Clinic (LITC) program is to provide low-income taxpayers who are involved in controversies with the Internal Revenue Service (IRS) with free or nominal cost legal assistance and to provide taxpayers for whom English is a second language with education on their taxpayer rights and responsibilities. In 2009, TAS, an independent agency within the IRS, provided a total of $9.5 million in Federal funds to 162 LITCs.
TIGTA evaluated the actions taken by TAS management to improve the administration of the LITC grant program and determined whether those actions resolved conditions identified in prior TIGTA audits.
TIGTA’s review identified that while additional procedures and controls have been implemented since its last audit, TAS can take additional actions to more effectively ensure the LITCs are using grant funds appropriately. Specifically, TAS personnel did not perform in-depth analyses during their site visits to the LITCs to independently validate that the clinics met the program requirements for the funds received. As a result, there is an increased risk that clinics could be using taxpayer funds to assist taxpayers in ways not intended by Congress.
TIGTA also determined that TAS management has not implemented a process to prioritize its visits to the LITCs.
“The Taxpayer Advocate Service must fully ensure that Low Income Taxpayer Clinics that are grant recipients are using taxpayer funds for their intended purpose,” said J. Russell George, Treasury Inspector General for Tax Administration. “A documented process will assist TAS in focusing its resources on the clinics most in need of assistance and/or oversight,” he added.
TIGTA recommended that TAS: (1) develop and implement revised procedures to require more comprehensive site visits, (2) require that all clinics keep a minimum level of information to support income and controversy determinations, and (3) develop and document a process for identifying which clinics will be selected for site visits. TAS management partially agreed with TIGTA’s recommendations. They stated that they have begun implementing significant changes to the site assistance visit process; however, they contended that it would be inappropriate to verify client incomes and amounts in controversy absent clear, specific statutory authority. Without this verification, TIGTA remains concerned that TAS is not fully ensuring clinics are using taxpayer funds for their intended purpose.
Read the report.
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