The University of Baltimore Low-Income Taxpayer Clinic is pleased to announce a major victory. On September 14, 2017, the Internal Revenue Service accepted an Offer in Compromise submitted by the Clinic to resolve two of its clients’ outstanding tax debt for a series of monthly payments, reducing the clients’ tax liability by a landmark $715,101.60. This is the largest reduction ever achieved by the Tax Clinic as well as much-needed financial relief for the clients. The taxpayers, a married couple, have requested that their names be withheld.
The taxpayers operated a business that collapsed due to the mortgage bust of 2008 and have since been unable to find steady work, leaving them with large outstanding tax liabilities and minimal income. The Tax Clinic does not normally accept cases involving liabilities this large, but due to the clients’ desperate financial situation and the case’s pedagogical value, it made an exception here.
As in all the Clinic’s cases, the taxpayers’ case was handled at all stages by student attorneys working under the supervision of Tax Clinic Director John B. Snyder, III. Over the last two years, the Clinic’s student attorneys have litigated the substance of the liability in U.S. Tax Court, counseled the clients on seeking collection relief, assembled and drafted the Offer in Compromise, and advocated for its acceptance by the IRS.
The IRS’s Offers in Compromise program allows taxpayers who cannot afford to pay their tax debts in full to resolve their debts for less than the full amount due. The result the taxpayers received in this case is not typical; each tax collection case is different. Whether the IRS accepts an Offer in Compromise depends on an individual taxpayer’s circumstances. Submitting an Offer in Compromise is a rigorous process, requiring extensive substantiation of taxpayers’ income, assets, and expenses to prove their inability to pay in full. In this case, the Clinic’s student attorneys assisted the clients in gathering their substantiating documents, submitted the Offer in Compromise to the IRS, and provided additional information and documents to the IRS in support of the offer when requested.
Student attorney Toni Norris stated of her work on the case that “[t]he hands-on experience of engaging with clients, conducting your own research, speaking with third parties, and ultimately knowing that you have individuals depending on the quality of your effort truly enhances one’s ‘inner attorney.’” She added that although this case “was handed down to various student attorneys throughout the semesters, we were all capable of playing an active role in producing a landmark outcome for the clients. It is not often that the Tax Clinic receives a result so immense, but it was accomplished using skills that each of us as student attorneys learned through the Tax Clinic.”
As one of the clients noted, “Getting to now was a superb effort of many,” including former student attorneys Stacey Morris, Christopher Stock, and Elzara Akhmedov, summer assistant Corina Braun, and current student attorney Toni Norris, all supervised by Professor Snyder. He publicly extends his thanks for all their efforts on this case.
The University of Baltimore Low-Income Taxpayer Clinic represents low-income taxpayers in tax controversies with the federal government. Potential clients must normally have annual household income of less than 250% of the federal poverty level. Additionally, with very limited exceptions, the Clinic may only represent taxpayers with an amount in controversy of $50,000 or less per tax period, exclusive of interest. For more information on the Clinic and the types of cases it handles, please visit the Tax Clinic Potential Client page.