June 10, 2016 Pro Bono Matters

Pro Bono Matters in the District

By Francine J. Lipman, William S. Boyd Professor of Law, University of Nevada, Las Vegas

Section Members in a District Dense with Lawyers

Each May since the 1960s members of the Section have come together to meet in our nation’s Capital. The Section’s meeting in Washington D.C. enjoys the best attendance of the annual meetings—at about 2,100 members or double the attendance of each of the other two meetings. This is not surprising, given that the District is home to 1,116 Section lawyers, ranking third in Section membership behind the much larger geographic regions of New York (1,565), and California (1,459).  But D.C. Section members are only about 2% of the 52,000 lawyers residing in the District, by far the densest population of lawyers in America. The Capital City has 775 lawyers per 10,000 people or almost 20 times the average of 40 lawyers per 10,000 people nationwide.1

Although Section lawyers come to D.C. each year, many members don’t have a chance to venture outside of the conference hotels and traditional tourist attractions given the intense schedule of committee meetings, CLE sessions, and events. Like our beloved tax system, Washington D.C. is multidimensional. Named after America’s first president and fifteenth century Italian explorer Christopher Columbus,2 D.C. is home to almost 675,000 Washingtonians. Living in just 61 square miles (interspersed with 7 square miles of water), housing is limited and expensive (in part because of significant building height restrictions).  The result is a cost of living among the highest in the nation. And while higher-income families have seen their earnings, real estate, and wealth boom, the District’s poorest families have suffered deep and persistent losses.

As tax attorneys we are comfortable with numbers, but the District’s income statistics are harrowing. The average annual income of D.C. households in the bottom quintile is $9,300—down from $10,800 in 2007 and lower than the same statistic for most major cities. The average household income of the top 5% is $487,000, the third highest among large U.S. cities. As a result, D.C.’s highest income earners make 52 times the lowest earners, generating an income inequality gap that is the fifth highest among large cities and just behind New Orleans, Boston, Atlanta, and New York City. These income and wealth gaps seem to be widening and the consequences are reverberating throughout the District’s divergent neighborhoods.

Poverty Is a Problem in the District

In 2016, D.C. suffers from a severe affordable housing crisis, rising family homelessness, high unemployment rates, and falling income among the poorest residents. The District’s overall poverty rate is above the national average at more than 18%, but for D.C.’s children the poverty rate soars to 28%. One in ten residents live in extreme poverty, or below half of the poverty line. Poverty is concentrated and segregated in D.C., with nearly three-fourths of poor households headed by people of color, and almost half headed by someone who was born in D.C. (only 31% and 17% in the general population, respectively).

These statistics can be mind-numbing, but they have profound daily, as well as long-term, implications for our nation’s Capital. From February to May of 2013, one local youth service provider turned away at least 150 unaccompanied minor children due to lack of emergency shelter space. The District also has the nation’s second highest rate of food insecurity among children. One in three children in Washington, D.C. lives in a home where there is not enough food for them to eat. In the past decade, Catholic Charities has more than doubled emergency food services. Food insecurity is harmful to any individual’s physical and mental well-being, but it is particularly devastating for children due to critical brain, bone and organ development. The adverse long-term physical and mental health and related financial consequences are devastating for our economy and country.3

Tax Credits Subsidize Low-Income Wages to Provide a Living Wage

Fortunately, some remedies are being unleashed to try to turn back this debilitating trend. Together with several other states, the District is raising its minimum wage and enhancing its EITC. Recent minimum wage increases together with an expanded D.C. EITC should make work pay more effectively for lower-income working families. The District has raised the minimum wage from $8.25 per hour in 2013 to $11.50 for 2016 and expanded the already significant D.C. EITC for childless workers. About half of District families who will benefit from the higher minimum wage have incomes below or near the poverty line – a group that should also benefit from the D.C. EITC. The expanded childless worker D.C. EITC should mitigate the harsh reality that America taxes into poverty certain low-wage workers.

Twenty-six states and the District have EITCs that build on the antipoverty benefits of the federal EITC. While twenty-four of these EITCs are refundable like the federal EITC, including New York and California,4 the balance or three states, including Ohio, Virginia, and Delaware, have nonrefundable EITCs. Washington has a refundable EITC, but with no state income tax it has not been funded to date. In addition, there are eight states without any state income taxes on wages including Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming. Thus, almost 70% or 34 states, plus the District of Columbia, either don’t impose an income tax, offset the income tax, or even subsidize low-income wage earners.

State EITCs are simple to administer and implement because they piggyback on the federal EITC traditionally as a percentage ranging from 3.5 to 40%. The District’s EITC is the highest in the nation at 40% of the federal EITC for workers with children and about 100% of the childless worker EITC beginning in 2015. The most recently available data, for the 2011 tax year, reveals that 56,000 D.C. tax filers claimed more than $53 million in D.C. EITC, with an average benefit of $954 per household. Similarly, for the same tax year, 54,000 taxpayers claimed $110 million in federal EITC averaging $2,100 per household. With more than $3,000 in average EITC benefits going to working D.C. families, low wages are being meaningfully supplemented. Because these tax benefits are life-changing to these families, it is important to ensure that families receive these benefits and get to keep them. D.C.’s EITC participation rate is just over 75%, about 5% below the national average of 80%. Based upon these numbers 18,000 D.C. taxpayers are not receiving over $35 million dollars of federal EITC for which they are eligible. Tax justice advocates are trying to remedy this gap.

D.C. Tax Justice Advocates Serving the Public Good by Lifting Families Out of Poverty

The District has several tax outreach and education nonprofits that provide free access to tax justice for qualifying D.C. taxpayers.

Community Tax Aid (CTA)
www.communitytaxaiddc.org

Providing Free Tax Assistance to Those in Need”

A 2015 Favorite Place to Volunteer (Washington Post Poll):
“The best volunteer work there is, because you are providing an obviously important service to people who genuinely benefit from high-quality tax preparation, maximizing the tax benefits they qualify for, and saving them a couple hundred in fees.”
Katherine Lucas McKay, Silver Spring

Under the leadership of Teresa Hinze, Executive Director, and Miren Beitia, Program Coordinator, CTA is on the front lines year-round assisting lower income families prepare and file accurate and timely federal and D.C. tax returns to ensure that they receive the full value of EITCs and other tax benefits. These free services save taxpayers many hundreds of dollars in tax preparation and filing fees, which exponentially benefit their households and communities.5

Over 500 volunteers annually donate their time and expertise to CTA clinics located in libraries, churches, and community centers in Washington, D.C.; Montgomery and Prince George’s Counties in Maryland; and the City of Alexandria, and Arlington County in Virginia. During the 2012 filing season, CTA volunteers helped 5,500 taxpayers receive over $7.4 million in federal and state tax refunds.

CTA was founded in 1987 by an engaged group of tax professionals and concerned citizens who recognized a growing need for free tax preparation, filing, and representation services for low-income taxpayers in the Washington, D.C. area. Due to the increased complexity of the tax system, these individuals sought change within their community, especially for taxpayers with limited education or English language skills.

One of the 2016-2018 Christine A. Brunswick Public Service Fellows, Laura LaPrade,6 a recent graduate of the University of the District of Columbia, David A. Clarke School of Law, is now working with CTA. Laura represents clients in tax controversies, engages in educational outreach projects, and plans to develop a network of pro bono tax attorneys who will provide assistance to low-income taxpayers.  

Low Income Taxpayer Clinics in the District

The Janet R. Spragens Federal Tax Clinic, Washington College of Law, American University
www.wcl.american.edu/clinical/federal.cfm | https://www.youtube.com/watch?v=FP5Ifn1fSbU

Located in a brand new building in the heart of D.C., Nancy Abramowitz, Clinic Director and Professor of Practice of Law, 7 and Janet Mueller, Practitioner in Residence,8 work with students to represent low-income taxpayers in the District. Named after Professor Janet R. Spragens, the Section’s legendary pro bono advocate and maven,9 American University’s Federal Tax Clinic is a litigation clinic offering legal representation for clients before the Service in appeals conferences and, if the cases do not settle, in U.S. Tax Court. Clinic clients who come from diverse backgrounds and walks of life frequently face barriers such as lack of language proficiency, accounting skills, education, and cultural familiarity. Clinic student attorneys meet regularly with supervisors to discuss cases and strategies, as well as attend a weekly three-hour seminar. The seminar encompasses group case reviews and discussions of other substantive, procedural, and ethical issues related to tax representation.

David A. Clarke School of Law, University of the District of Columbia (UDC-DCSL)
http://www.law.udc.edu/?page=LITClinic

Under the Directorship of Associate Professor of Law Jacqueline Lainez,10 the UDC-DCSL Low Income Taxpayer Clinic provides students with hands-on experience representing taxpayers who have active tax controversies pending with the Service and in U.S. Tax Court. Students represent qualifying District residents referred to the clinic by the government, and various local non-profit and advocacy organizations. LITC clients have no right to court-appointed attorneys and the vast majority cannot afford to hire private counsel. Tax controversy cases include EITC examinations, tax return audits resulting in tax deficiencies, and the denial of other tax credits.

In addition to representation, the LITC conducts tax outreach events in the community to advise District residents of their rights and responsibilities as taxpayers. Many of these outreach events are conducted in immigrant communities and are conducted in Spanish and Amharic. Participation as a law student in the LITC is good preparation for a poverty law practice, a general law practice, or a future career as a tax attorney.

Pro Bono Tax Law Matters in the District

Supplementing the above and more, the District is home to the Section’s office located at 1050 Connecticut Ave. N.W. Suite 400, where together with outstanding and dedicated colleagues, Derek Wagner, Pro Bono Counsel,11 manages the Section’s pro bono efforts, Low Income Taxpayer Clinic relationships, Christine A. Brunswick Fellowship outreach and selection process, and exempt organization support.

Next time you find yourself visiting our nation’s Capital (e.g., next May meeting), please consider supporting these social justice advocates delivering pro bono tax services to our less fortunate and vulnerable D.C. neighbors.


1 By comparison New York has just over 87 lawyers per 10,000 people and California has just over 42 lawyers per 10,000 people. See https://lawschooltuitionbubble.wordpress.com/original-research-updated/lawyers-per-capita-by-state/.

2 For more interesting facts about Washington D.C., see http://washington.org/DC-information/washington-dc-quick-facts-kids.

3 Feeding America offers information on the long-term adverse health consequences of hunger on children “Workers who experienced hunger as children are not as well prepared physically, mentally, emotionally or socially to perform effectively in the contemporary workforce. Workers who experienced hunger as children create a workforce pool that is less competitive, with lower levels of educational and technical skills, and seriously constrained human capital.” Child Food Insecurity: The Economic Impact on Our Nation.

4 The states with refundable EITCs include California, Colorado, Connecticut, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Massachusetts, Maryland, Michigan, Minnesota, Nebraska, New Jersey, New Mexico, New York, Oklahoma, Oregon, Rhode Island, Washington, Wisconsin, Vermont, and the District of Columbia.

5 See Paul Weinstein Jr., & Bethany Patten, The Price of Paying Taxes II: How Paid Tax Preparer Fees Are Diminishing the Earned Income Tax Credit (EITC), Progressive Policy Institute: (Apr. 2016) (stating that in a survey of storefront operations in Washington D.C. tax preparation fees for EITC recipients ranged between 13% and 22% of the average EITC; that is, with average federal and D.C. EITCs of $3,000, the fees ranged between $390 and $660).

6 For more information about the Christine A. Brunswick Section Fellowships, see http://www.americanbar.org/groups/taxation/awards/psfellowship.html.

7 Nancy Abramowitz specializes in taxation, employee benefits, general business law and alternative dispute resolution. She has served on the Section (Low Income Taxpayer Committee); Board of Academic Advisors, and The Theodore Tannenwald, Jr. Foundation for Excellence in Tax Studies. She is a volunteer mediator/arbitrator for the D.C. Superior Court and volunteer mediator for the U.S. District Court for the District of Columbia. She is also trustee for the Abe Foras Memorial Fund, John F. Kennedy Center and former partner at Arnold and Porter.

8 For more about Janet Mueller, see www.wcl.american.edu/faculty/jmueller/.

9 For information about the Section’s Annual Janet R. Spragen Pro Bono Award and named awardees, see http://www.americanbar.org/groups/taxation/awards/probono.html.

10 For Professor Lainez’ faculty biography, see http://www.law.udc.edu/?page=JLainez.

11 Derek B. Wagner, Pro Bono Staff Counsel, can be reached at (202) 442-3425, or Derek.Wagner@americanbar.org.