University Times

Normally, when low- and moderate-in- come taxpayers get in trouble with the Internal Revenue Service (IRS), the last person they turn to for help is a tax lawyer.

That's because attorneys who specialize in tax law charge upwards of $300 per hour. Their clients usually are limited to organizations and individuals with huge resources (or at least enormous tax liabilities). Poor and middle-income people go into battle against the IRS alone or, at best, accompanied by their accountants.

But a new Pitt law school clinic is offering free legal help to IRS disputants whose incomes are no more than two-and-a-half times the poverty threshold as defined by the federal government. That works out to $20,600 for an individual with no dependents, for example, or $41,750 for a taxpayer supporting a four-member household.

The new Federal Tax Clinic at the University of Pittsburgh School of Law is staffed by a dozen tax law students and two tax attorneys from Downtown law firms. It charges no fees and represents persons whose income tax returns are being examined by the IRS, who are in trouble with the IRS over taxes owed, or who have tax cases pending before the U.S. Tax Court. (The clinic does not help in preparing tax returns.) Pitt law professor Tom Ross, director of the school's clinical program, said the tax clinic is building its client base and welcomes inquiries. Potential clients should call 648-2656 for a free consultation to determine if they qualify.

"The clinic will decide whether or not to represent you based on your income, the issues involved in your case, and the availability of our students," Ross said. "If the clinic decides to represent you, we do so free of charge."

He emphasized that conversations with callers and/or clients are confidential, and no information is disclosed to outside persons without the caller's and/or client's consent.

The IRS itself is funding Pitt's tax law clinic and 49 others around the country, including one at Duquesne University's law school. "It's ironic," Ross acknowledged, that the service is paying to help defend people it is investigating. "But they're doing it because they recognize that professional legal assistance is out of reach for low- and middle-income persons in tax disputes," he said.

And increasingly, those are the people the IRS is targeting for investigation.

The New York Times recently reported that the IRS has increased the number of its audits of poor and middle-income taxpayers, while decreasing investigations of high-income people.

Ross cited two examples of tax troubles commonly encountered by working stiffs:

* Income tax credit cases in which the IRS rules that an individual or family erroneously received a payment through the federal government's tax credit program for the working poor. "It's a form of reverse income tax," Ross explained. "If you earned below a certain income level, you get a check back from the federal government. It's not a great deal of money, usually $3,000 to $4,000, but for many families it's a critical part of their finances." When the IRS rules against a tax credit recipient, it rarely recovers the money — but it may block future tax credits for that family or individual, Ross said.

* "Innocent spouse" cases, typically involving a divorced or separated couple who, when still married, failed to file a tax return or filed a joint return that the IRS, years later, determines was false or fraudulent. "Maybe the spouse who filed the return misled the other or even forged his or her signature on the return," Ross said. "In any case, the IRS holds both people accountable. Under the law, a tax liability survives a divorce or separation."

The University's first-year IRS grant of $22,760 supported classroom training for students last fall and will fund services to taxpayers this term. Ross said the clinic will apply for a $55,000 followup grant for next year and, ultimately, $100,000 (the maximum the IRS clinic program provides) to make Pitt's clinic a year-round operation.

Unlike the Pitt law school's five other clinics and its projects with Neighborhood Legal Services and the Southwestern Pennsylvania Legal Aid Society, the new tax law clinic is not intended to serve only indigent clients.

"We're very careful not to represent people who can afford to hire a lawyer," Ross said. "And, professionally, it would be inappropriate for us to take business away from private attorneys. But tax law is the exception, because only the wealthy can afford an experienced tax lawyer."

Two such lawyers from Downtown law firms — Tom Arbogast, a partner in Schnader Harrison Segal & Lewis, and Leo Hitt, a partner in Reed Smith Shaw & McClay — supervise the budding tax attorneys in Pitt's clinic.

According to Ross, students clamored to work for the clinic. "Traditionally," he said, "students specializing in tax law haven't had the opportunity to do community service work" directly connected to their studies.

— Bruce Steele