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Tax Law Project

Helping Low and Moderate Income Taxpayers in
Northern and Central Illinois with
Federal Tax Problems

About The Clinic

Prairie State Legal Services, Inc. is a civil legal aid organization that operates a Low Income Tax Clinic offering FREE legal help when you have a tax dispute with the IRS.

Matters The Tax Clinic Handles

The Clinic handles a wide variety of tax matters. We may be able to:

  • Dispute Tax Debts - Reduce or eliminate taxes, and get back money paid to the IRS
  • Collections - Stop the IRS from taking your Social Security benefits, wages, or money from your bank account
  • Litigation - Represent you in the United States Tax Court
  • Innocent Spouse Relief - Obtain relief from a joint tax debt caused by your spouse or ex-spouse
  • Exams/Audits - Dispute IRS claims about your income, deductions, or credits
  • Identity Theft - Help when someone steals your identity for tax purposes

How To Qualify For Services

Individuals living in our 36-county service area may qualify for no cost advice or representation in federal income tax matters. In many cases, you will not have to travel to the Clinic, and we can help by phone, email, or mail.

Generally, clients can have income up to 250% of the Federal Poverty Level (FPL) - see table below. With certain exceptions, the amount in dispute with the IRS for each tax year may not be more than $50,000.

2017 Federal Poverty Level - Illinois
Size of Household 250% FPL
1$30,150
2$40,600
3$51,050
4$61,500
5$71,950
6$82,400
7$92,850
8$103,300
For each additional member of the household in excess of 8, add: $10,450

Contact the Clinic hotline at 1-855-TAX-PSLS (1-855-829-7725) or apply online to see if you are eligible. We check the hotline mailbox throughout the week, so please leave a clear and detailed message with your name, phone number, and best time to return your phone call.

Why You Should Contact The Tax Clinic

Resolving tax issues can be challenging for the average person. IRS letters can be confusing, and important deadlines can affect your case resolution options. The opportunity to schedule certain important hearings may be lost if you do not comply with IRS deadlines. The experienced tax professionals in the Tax Clinic will help you sort these complicated tax matters and help you resolve your issue.

You May Have A Tax Issue And Not Know It

The U.S. Tax Code affects many people’s lives on a day-to-day basis. You may have potential issues with the IRS and not realize it. For example:

  • Earned Income Tax Credit (EITC) - The EITC is a credit for working individuals and families. The credit can be worth over $6,000, and it is claimed on your income tax return. The IRS estimates that up to 20 percent of those who qualify for the EITC never claim it on their tax return.
  • Do I Need to File a Tax Return for a Prior Year? - If you are legally required to file a tax return and fail to do so, the IRS may file a return on your behalf. If that happens, the taxes can be higher than if you filed yourself, because the IRS will not include all of the deductions and credits that you may be eligible to receive.
  • Collections - The IRS has broad collection powers, including taking money from your bank account, taking your Social Security benefits, garnishing your wages, and filing federal tax liens. However, the IRS has only 10 years from the date of the assessment to collect a tax debt (with some exceptions). After 10 years, the debt will go away automatically. This 10 year period will not start unless you file a tax return or if the IRS files a return on your behalf. Failing to file or filing late delays the start of the 10 year collection period, which is why it is important to file on time even if you are unable to pay your taxes.
  • Identity Thieves Can Take Your Refund - If someone has your personal information such as your Social Security number, they could use your identity to file a return and claim a refund. If you think this has happened, you should call the Clinic to protect your identity and recover your tax refund.
  • After a Divorce, Who Gets to Claim the Children? - Claiming dependents may be confusing for divorced parents who share custody. Often, parents are mis-informed as to the rules for claiming children after a divorce or separation. If an ex-spouse incorrectly claims your child, you should contact the Clinic for help.
  • Tax Issues in Domestic Violence - When you file a joint return, both parties are liable for the tax debt stated on the return, and for any omissions not listed on the return, even if you leave your spouse or divorce. These issues frequently arise in domestic violence cases, and in many cases, the abused spouse may be able to eliminate the debt by requesting Innocent Spouse Relief.
  • When a Lender Cancels Some or All of a Debt you Owe - If a lender forgives all or some of your debt, it will be considered taxable income, unless an exclusion applies. This commonly arises with cancelled credit card debt, car repossessions, and foreclosure or short sales. For many low- to moderate-income taxpayers, the debt can be excluded because the taxpayer is insolvent.
  • Tax Implications of Settlements In or Out of Court - Settlement money you receive from a lawsuit or a legal claim is likely taxable income and must be reported on your tax return. You should consider this before reaching your settlement terms.

What Can You Do?

You can minimize your risk of running into issues with the IRS by:

Filing A Return

  • File on time (even if you cannot pay the balance due)
  • Use a trusted return preparer if you cannot file yourself.
  • Pay as much as you can by the filing deadline.
  • If you still owe, contact the IRS to set up a payment plan. If you cannot pay anything, you may qualify for a hardship. The IRS will work with you based on your current finances.

Keeping Good Records

  • Tax returns (at least the past 3 years)
  • Bank statements, bills, and loan documents
  • Business records (income and expenses)
  • School records, medical records, applications for public benefits (for yourself and any dependent claimed on the return)
  • Anything else that supports any item on your tax return

Deadlines

  • If you get a letter from the IRS, respond quickly. Ignoring letters may result in increased taxes, penalties, and interest.
  • If you move, contact the IRS or file Form 8822 to inform the IRS of your new address to ensure that you receive all correspondence form the IRS.
  • Doing nothing makes matters worse!
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