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.