When Katty, mother of two, received a notification from the IRS that her tax return was in question, it could not have come at a worse time.
She had just spent a month in the hospital recovering from life-saving brain surgery after suffering a stroke. Despite her healthy lifestyle, Katty learned that she’d been born with a life-threatening condition called an arteriovenous malformation (AVM), which is known to cause brain bleeds. Moreover, Katty had also recently lost her father; as he lived in Peru, she was unable to be by his bedside when he passed. In the midst of this deep sorrow and physical hardship, the last thing she needed was an added financial burden.
The IRS stated that Katty had 30 days to provide documentation proving her entitlement to claim her children on her tax return. Having placed her trust in a professional tax preparer, she’d been told to expect a sizable refund. A mother of low-income status, Katty was depending on this refund to make ends meet. Instead, the IRS incorrectly alleged that self-employed Katty had earned no income that year. For many, this would merely be a frustrating inconvenience, but for Katty, it put her livelihood at risk.
Katty thought she was out of options until she learned about Bay Area Legal Services. She applied for assistance through the Low-Income Taxpayer Clinic.
Attorney Nancey Penner took on the case, enlisting the assistance of a volunteer tax preparer to correct the mistakes on Katty’s original tax return. Nancey worked with the IRS, advocating that Katty had earned income during the year, and when those efforts failed, Nancey went further to file a petition in the U.S. Tax Court on Katty’s behalf.
Prior to the Tax Court hearing, Nancey was able to convince the Appeals Officer handling the case that Katty had indeed earned income for the tax year—but the IRS still refused to send the refund. That’s when Nancey contacted the Taxpayer Advocate Service, which finally resolved the issue: Katty was awarded her full and rightful tax return.