David D. Stewart: Welcome to the podcast. I'm David Stewart, editor in chief of Tax Notes Today International. This week: clinical view.

Across the United States, there are just over 130 low-income taxpayer clinics. These clinics, also known as LITCs, help low-income taxpayers resolve tax disputes with the IRS at little to no cost. But these clinics sometimes offer more than just tax resolution services to the community. They also act as taxpayer rights advocates, tax filing aids, and even financial literacy educators.

That is certainly the case for the La Posada Tax Clinic, the sole LITC in all of Idaho. This clinic in Twin Falls was founded in 2004 as part of the faith-based charity La Posada Ministries, which helps immigrants and temporary foreign workers adapt to life in the United States. I spoke with the tax clinic's director, Robert Wunderle, about the tax clinic's founding, the role of LITCs in today's tax system, and his vision for the La Posada Tax Clinic tomorrow.

Now, before we begin, I should note that our parent company Tax Analysts is sponsoring a new public service fellowship for practicing tax attorneys to work in public interest tax law. And for the inaugural year, the candidate will work at the La Posada Tax Clinic. We'll discuss that toward the end of the interview. And if you'd like more information on that, there'll be a link in the show notes. All right, let's go to that interview.

Joining me now is Robert Wunderle, Director of the La Posada Tax Clinic. Bob, welcome to the podcast.

Robert Wunderle: Thank you.

David D. Stewart: First off, could you tell listeners a bit about yourself and how you came to be the director of a tax clinic?

Robert Wunderle: Well, this is an interesting story because I did not start out as an accountant in life. I was actually in the Air Force and retired after 24 years, then went into accounting. And I had been working as a volunteer in the VITA (Volunteer Income Tax Assistance) program for many years when I had an opportunity to meet a Catholic nun who was helping immigrants and migrant workers in South Central Idaho. And I asked her if she would like us to bring a team in to help some of her clients with their tax returns.

And she was thrilled by the idea. That was back in 2004. As we went through that first year, I and three other volunteers came in every Friday to La Posada to help Sister Rosemary's clients. And come April 15, there was still a waiting list. And many of the people that were coming in had problems with the IRS. They were either in examination, they had letters, their exemptions were being denied, and we continued to work on those things as we could. And we kept coming back every Friday throughout the end of the year.

So it was into December before we quit for that year. And the next year we came back in January and started all over again, the same type of thing. In February, I got a phone call from the IRS SPEC office (Stakeholder Partnerships, Education and Communication) that oversaw the VITA program that we were operating under and said, "You have been working way outside the box, but there is a grant available and they're looking for someone in Idaho, in Boise, and we think you should apply." Well, I said, "Boise is not Twin Falls. What's the point if they want someone in Boise?" Well, they convinced me to apply. I applied for the Low-Income Taxpayer Clinic grant to do the kinds of things that we had been doing anyway outside the lines of the VITA program.

And they started us off as an education grantee. In other words, we were funded just to help those folks learn more about rights and responsibilities, non-English-speaking clients to learn about their rights and responsibilities. And we got a small grant, about $20,000 to do that. So we accepted the grant.

We went from there and continued helping people with controversies. And we got way behind in our reporting for the grants. And in 2008, they didn't renew our grant. So we were out of the program, which was actually a relief for me in some extent because the reporting burden was extreme, we didn't have much funds anyway, and it seemed like the program office was never happy with us because we weren't doing things quite exactly the way they thought we should be.

Well, in 2008, the program again had what they call a "mid-year opportunity" for someone to come in and get a grant. So after we were dropped out of the program, in the middle of the year I started getting phone calls from the local taxpayer advocate office from the former analyst who was working with us in the LITC program office. And they were all encouraging me to apply again. And again, I was reluctant because I never felt a great deal of comfort in operating the clinic the way they wanted us to. And we were doing controversy and we had only been funded for educational outreach. But I was finally convinced, put in an application. And the $20,000 grant became almost $60,000 for a half year.

So something was going on that I wasn't quite aware of, but I discovered later that Nina Olson had taken notice of what we had been doing and had been impressed and made the decision to get us back into the program and give us better funding. Now, up until that time, most of the work we had been doing — we're getting people into filing compliance, getting them into collection compliance, getting them into noncollectable status if they couldn't afford to pay, and helping folks with ITINs (Individual Taxpayer Identification Number) and just resolving examinations, doing audit reconsiderations.

David D. Stewart: So why don't we turn from the specific of your clinic and talk a little bit more generally. I'm kind of curious about how you view the role of low-income taxpayer clinics in general.

Robert Wunderle: The role of a low-income taxpayer clinic is basically to help to give professional and legal advice and assistance to low-income taxpayers who are in a controversy with the IRS and they can't afford to hire a CPA or a tax attorney to represent them. You have situations of—

Let's talk about collections, for example. You've all heard the ads on TV, "If you owe the IRS $10,000 or more, we can settle that for pennies on a dollar." Yes, that's referring to what is called the Offer in Compromise program. And in certain cases, it can be settled for pennies on the dollar, but only if you don't have the assets and income to pay what you owe and you can substantiate that.

The $10,000 threshold you hear in the advertisements is because the companies that are advertising this are charging around a $2,000 upfront retainer fee. I think I just saw it today or yesterday, a notice from the IRS they consider this a scam because most of the people that call in and pay are not eligible for the pennies on the dollar. A few might be.

David D. Stewart: Yeah. It seems anywhere where someone's talking about wiping out a debt and if you pay them they'll help you out, there's often some sort of scammy quality to that.

Robert Wunderle: Yes. The other thing that we do is, and I've talked about this, is advocacy. If we see something that is harming low-income taxpayers, especially disproportionately.

There's one right now that's going on that I just got off the phone with the IRS on. The IRS has what's called the Online Payment Agreement system, OPA. Now, that lets you set up an installment arrangement online. And if you would set it up with direct debit and you're a low-income taxpayer, you should be able to do that without a fee being charged for setting up the agreement.

Well, agreements should be able to go out as much as 72 months, but the Online Payment Agreement software is not functioning correctly and it doesn't let you go more than 36 months. And it wants far more money to settle a debt in that shorter period of time than our low-income clients can pay. As soon as we pick up the phone and try to get that same agreement on the telephone, they're hit with a service fee that they wouldn't be hit if we could do it online. The IRS cannot fix that right now. They don't have the funds to do the IT work that would be necessary to reprogram it.

So that type of advocacy is important. Another thing we advocated for a long time and got nowhere with was having a flag put on tax numbers, these ITINs issued to children that were living outside the country so that those children couldn't be claimed for the child tax credit. And the IRS didn't have the money to do that either. They didn't quite say it to us that way. They told us that they didn't have the legal authority to do it, which I would dispute. They had the legal authority, they just didn't have the money to do the software changes. Congress finally took it into their hands and said, "OK, no children with ITINs are any longer eligible for the child tax credit." It used to be that if they lived in the United States, they could get it. If they lived in Mexico, they couldn't.

That's the kind of things that low-income taxpayer clinics do. Other low-income taxpayer clinics have been very successful, for example, in getting other significant changes to IRS policy.

David D. Stewart: Now, does your clinic specialize in helping migrant workers, or is there other work that you do as well?

Robert Wunderle: We don't specialize in that exclusively, but we have become a resource throughout the country. The IRS has done one webinar on tax law related to H-2A workers, but I have gone and spoken at various venues on the subject throughout the country, done a number of presentations for the National Council of Agricultural Employers. And we get calls sometimes daily, but at least one a week from either a tax attorney, a tax professional, an employer asking how they should be handling tax-related matters for their H-2A workers. And we now are helping H-2A workers throughout the country because a lot of the agencies that we've reached out to now put our contact information in packages that they give to their employers. And these are the agencies that actually help recruit the farm workers.

So we have become nationally known as a go-to place to get good information on tax law regarding the H-2A worker community. But we do everything else that all other low-income taxpayer clinics do in addition to that.

David D. Stewart: So in your time at the tax clinic, what would you say is the most complicated issue you've been presented with?

Robert Wunderle: Most complicated... There's one that comes to mind was a state issue. I had a client come in who had not filed for a couple of years, business had gone under, got involved in drugs, did some time in prison, came back out, and had huge debts with the IRS and the state, that began when the IRS did what they call a "substitute for return." And in this particular case, we got the federal resolved and taken care of, but we were having a problem with the state. And they had done their own substitute for return. And it didn't matter how you did it on the state substitute for return, they just, in our opinion, they had done it wrong.

So we proposed them two or three different alternative ways to reconstruct the couple's income and pointed out that the auditor who had reconstructed it had taken 1099-Miscellaneous Forms that had been issued by the different farms these people were working for and getting payments from and added those 1099-Miscellaneous reports of income to the income they had assessed based on prior year tax returns. And this is somewhat complicated because when you do a Schedule C business return, you include in it all the 1099-Miscellaneous Forms plus any cash that wasn't reported to the IRS as your income.

So the state tax commission had taken a base year and extrapolated that into future years. And the base year included the 1099-Miscellaneous in income from those years. But in the extrapolated years, they added the 1099-Miscellaneous to it. And it was a case that took us a year or so to resolve. It had to go to the state tax commission. And they finally agreed that the levies that these people had been paying for a couple of years had more than paid what the true liability was and the case was dropped.

That was one that was more challenging than most. There have been a couple of others.

And right now, I'm having a senior moment.

David D. Stewart: Well, that's quite all right. That sounds pretty challenging, so that's a good answer to what I asked.

So, I have another opportunity to talk about a different type of case. In your time at the clinic, is there a case that you look back on as something that you resolved that just makes you proud? You're just really happy that this is something that you were able to get to a resolution on.

Robert Wunderle: We had one fellow come in fairly recently, and he has a disabled daughter who has epilepsy and she has a child. And he had been filing with claiming his disabled daughter and his grandchild on his tax return. And because the child was disabled, he was claiming her for the Earned Income Credit. And in the tax provision, that's an allowable thing. But if you're audited, you have to be able to demonstrate that the child is disabled.

This is an immigrant from Peru. His English is limited. And several times he would go to his doctor and ask for correspondence and the doctor's office would write something. The first time they just gave us a note on a prescription pad. And it never quite said what the IRS wanted it to say. So we continued to go back two or three times to the doctor, and it took us about a year and a half to finally get something from the medical provider in a format that the IRS would accept. And just a few months ago, they finally released his refund from 1999.

David D. Stewart: Wow. That's a long time to resolve an issue. OK. That's impressive. All right.

So, turning to a more general question again, what do you see as something that the IRS should be doing now to better support low-income taxpayers?

Robert Wunderle: I think they have to take a long, hard look at the filters they're using for their various programs. The integrity verification operation where people have to call in and identify themselves seems to me that a disproportionate number of low-income people are being hit in the filters that are freezing refunds or slowing things down. And again, it hits farm workers quite heavily. And when they call in, the IRS is expecting them to have records with a credit bureau that they can verify who they are, and yet people who come up every year as a guest worker and many undocumented people that are living here as residents but have ITINs don't have credit records. In Idaho, they can't even get a driver's license if they're undocumented.

So these people are extremely challenged in proving who they are, and oftentimes they can't do it because of the systems that are set up. And the IRS says go into a tax office. Well, there aren't that many tax offices around. Especially in rural areas where they can go in, they have to make an appointment. And for undocumented people, it's often in a federal building where they're at risk because they don't have identification to get in. And for a guest worker, they have to rely on an employer to get the time off and the transportation to go somewhere.

And it would be nice, I think, if the federal government would cooperate with some of the state tax offices and allow them to go into a state tax office and get that verification. After all, the federal government and the states have many agreements in which they exchange information all the time. And that would be one way that they could make it easier for people to verify their identities when they get caught up in one of these filters.

David D. Stewart: OK. So, I have another question about your time running this clinic. You've been doing it for a while now. Have you noticed any trends of things getting better or worse for low-income taxpayers?

Robert Wunderle: Oh boy. I think the trend has been going on for years and it affects low-income taxpayers— It affects everyone, but it affects low-income taxpayers the most because if they have a refund frozen, or if they're having problems with the IRS and they can't get it resolved, they suffer a financial hardship that may be just an inconvenience for someone who has greater resources than they do.

For the past decade or more, the IRS's funding has been cut. Their number of employees they have to do the job has gone down. And they've been tasked to do more and more and more. And as I'm sure you're aware in the last couple of years with COVID, it has become horrendous. We're now sometimes waiting a year or more to get answers to correspondence. When we try to work with someone and work with the IRS, it's exceedingly difficult to get information sent in, get it taken care of, and get a response back. And oftentimes, they end up in collections. You can get a collection hold for 30, 60, sometimes 90 days. But if it takes six months for the IRS to answer the letter you sent them explaining why they shouldn't be in collections in the first place, you have to keep going back or the notices keep coming.

David D. Stewart: Now, I mentioned in the intro, but it's worth repeating to be absolutely upfront about it. Tax Analysts is a sponsor of the Tax Analysts Public Service Fellowship.

So Bob, could you tell our listeners a bit about that fellowship and what you're looking for in candidates?

Robert Wunderle: What I'm looking for is a succession plan. I started this clinic almost 18 years ago. I am now, I just celebrated my 80 birthday a while back.

David D. Stewart: Congratulations!

Robert Wunderle: So, I am looking for someone to come in here and keep this clinic alive for the period of the fellowship, and that will give us time, I hope, with me still on board, to raise additional sources of funding so that we can keep the fellow on board as the clinic director into the future and keep a low-income taxpayer clinic operating in Idaho. Right now, we're the only one.

David D. Stewart: Well, Bob, it has been great talking to you. Thank you very much. And thank you for all of the work that you're doing for your community.

Robert Wunderle: I am only sorry that I hadn't gone over my cases to get more specific examples because there are so many that they all become a blur.

David D. Stewart: I can understand that sort of thing. Yeah, absolutely. But thank you very much.

Robert Wunderle: Thank you, sir. And thank you Tax Notes and Tax Analysts for the fellowship. It was a godsend when I was talking to the ABA and this came up.

David D. Stewart: And now, coming attractions. Each week we highlight new and interesting commentary in our magazines. Joining me now is Acquisitions and Engagement Editor in Chief Paige Jones. Paige, what do you have for us?

Paige Jones: Thanks, Dave. In Tax Notes Federal, Bradley Borden explains the ways in which fixed price put options disqualify tenant in common interests as eligible property in like kind exchanges. Hale Sheppard examines how U.S. tax treatment of foreign pensions has changed recently in an effort to tackle alleged abuse of Maltese retirement plans. In Tax Notes State, Billy Hamilton looks at the role taxes and incentives have played in the Superman franchise. Three practitioners question the constitutionality of New Jersey's suspension of its statute of limitations on tax assessments. In Tax Notes International, three teaching and research associates review the key topics in international tax cooperation addressed to the 24 session of the UN Tax Committee. Three EY practitioners outline the relevant legal basis for crypto taxation in Germany. In Featured Analysis, Marie Sapirie examines a court case on the digital asset reporting requirements, arguing that they pose procedural obstacles and privacy concerns for taxpayers. And finally, on the Opinions page, Nana Ama Sarfo discusses the role that labor unions played in the over €1 billion fine assessed against McDonald's and the precedent that it could set.

David D. Stewart: That's it for this week. You can follow me online @TaxStew, that's S-T-E-W. And be sure to follow @TaxNotes for all things tax. If you have any comments, questions, or suggestions for a future episode, you can email us at podcast@taxanalysts.org. And as always, if you like what we're doing here, please leave a rating or review wherever you download this podcast. We'll be back next week with another episode of Tax Notes Talk.

Tax Analysts Inc. does not provide tax advice or tax preparation services. The information you have seen and heard today represents the views of the presenters, which may not be the same as those of Tax Analysts Inc. It may include information obtained from third parties, and Tax Analysts Inc. makes no warranties or representations of any kind, and is not responsible for any inaccuracies. Nothing in the podcast constitutes legal, accounting, or tax advice. The tax laws change frequently, and neither Tax Analysts Inc. nor the presenters, can guarantee that any information seen or heard is accurate. Also, due to changing tax laws, any information broadcast or downloaded after its original air date may no longer represent the current views of the presenters. If you have any specific questions about any legal or tax matter, you should always consult with your attorney or tax professional.

All content in this broadcast is protected under U.S. and international laws. Copyright © 2022 Tax Analysts Inc. Unauthorized recording, downloading, copying, retransmitting, or distributing of any part of the podcast is strictly prohibited. All rights reserved.