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Projects, Units & Initiatives

Low-Income Tax Payer Unit

The Low Income Taxpayer Clinic (LITC) provides direct legal services to taxpayers who have personal income tax disputes with the Internal Revenue Service or the New York State Department of Taxation and Finance. Our work involves tax litigation, audits, refund claims, tax settlement, etc. We also provide trainings to members of the community, technical assistance to community-based organizations, engage in legislative and administrative advocacy and impact litigation, and work with State-wide advocacy coalitions on matters impacting low-income New Yorkers.

Our Impact

The LITC has seen an increase in the number of Cancellation of Debt cases, particularly in the taxi industry.  Many of those cases are related to the decrease in travel due to the COVID-19 pandemic and other industry trends.

In one such case, K.A., a taxi medallion owner who saw his income plummet in recent years, could not pay his medallion loan.  Thankfully, the lender canceled about $348,000 of K.A.’s loan to bring the loan balance more in line with the medallion’s $150,000 value.

K.A.’s tax preparer included the full $348,000–Cancellation of Debt (COD) income–in his taxable income, leaving him with a liability of over $105,000.  After conducting an insolvency evaluation and evaluating his assets and liabilities, however, the LITC determined that K.A. should have reported only about $4,400 in COD income, resulting in a tax liability of no more than $500.  The amended tax return saved K.A. over $104,500 in total income taxes.

Partnerships

The Legal Aid Society LITC engages in networking with advocacy groups, tax experts, and tax clinics that strive to improve the experience of, and advocate for, low-income taxpayers under both federal and state tax laws. This consortium of 14 law schools, bar associations, and other legal services providers across New York and Northern New Jersey convenes regularly to discuss emerging legal issues, share legal strategies, and reflect on the successes and challenges in tax advocacy.