UBS deal sends wrong message

Three American University law professors say that some terms of the UBS bank accounts deal make it look like America's tax laws are not enforced uniformly.

Nancy Abramowitz, Andrew Pike and Robin Westbrook, professor's at the D.C. university's  Washington College of Law, are particularly concerned about the possibility that some of the wealthy suspected tax evaders could get amnesty after their names are turned over by the Swiss to U.S. tax investigators.

In a letter to IRS Commissioner Douglas Shulman (text reproduced at Tax.com), the professors tell Shulman that:

"In the last few years, we have seen an increase in the assertion of penalties against the poorest, least sophisticated taxpayers with virtually negligible room for negotiation by the IRS. It would seem that a blanket program of offering reduced penalties and no criminal action to wealthy, sophisticated tax dodgers who come forward on the eve of their names being turned over to the IRS and with prior knowledge of the forthcoming disclosure, is suggestive of something less than even handed tax administration."

Some IRS help for poorer taxpayers: The professors know of what they speak. In 1997, Professor Janet Spragens, Director of the Federal Tax Clinic at American University's Washington College of Law, appeared before the National Commission on Restructuring the Internal Revenue Service and advocated for federal funding of low income taxpayer clinics. Her proposal was adopted by the Commission as one of its recommendations for a fairer and modernized IRS.

The resultant Low Income Taxpayer Clinic (LITC) program now is a resource for people who generally cannot afford to hire professional tax help when they encounter problems after they've filed. Schools and nonprofit groups step in with the clinics, which provide low-cost, and in some cases free, help. They are staffed primarily by volunteers who can represent low-income taxpayers in their IRS audit, appeals and collection issues.

As Spragens advocated, the LITCs are supported in part by financial help from the IRS through its National Taxpayer Advocate office. Each year, the office seeks applicants and selected clinics can receive up to $100,000 in matching federal grants.

Eligibility for LITC services is based on poverty guidelines set by the Department of Health and Human Services. They are adjusted annually for inflation. The 2009 annual income limits range from $27,075 for an individual to $64,475 for a family of five. For larger families, an additional $9,350 per person in earnings is allowed.

If you qualify, you can find the nearest LITC using the IRS locator map or in IRS Publication 4134.