About a year ago, Alice was happy to discover that her take-home pay from her job as a nursing assistant had gone up: even a little extra money helps a single mother of two. Then Alice filed her tax returns—and discovered that she owed an enormous sum because her employer had misclassified her as an independent contractor. She set up payment plans with the federal and state governments, but, fearful of losing her job, she didn’t mention the problem to her employer.
Alice was laid off anyway due to bad economic times—but the misclassification delayed her unemployment benefits. For four months she had no income and, unable to make her tax payments, she was subjected to collections from both the IRS and the State of Maryland. Because of her default, the State revoked her license as a nursing assistant until she paid 10 percent of her tax liability, which was impossible. She found a retail job, where her wages were half those of her former position and barely exceeded her unemployment benefits.
Then more bad news arrived: the General Assembly passed a law that would revoke Alice’s driver’s license and registration because of her tax debt. She would have no way to practice her profession or get to work—or pay her tax bill.
Fortunately, Alice was able to get help from UM Carey Law’s Low-Income Taxpayer Clinic, directed by Clinical Instructor Pam Chaney. In all of Maryland’s 23 counties and in Baltimore City, the Clinic assists clients like Alice with tax problems and provides free tax preparation through the IRS’s Volunteer Income Tax Assistance program. For tax year 2010, the Clinic completed more than 100 tax returns for clients with an average annual salary of $16,000. The Clinic’s students also train social workers, nonprofit providers, and state and local government employees about common tax issues that low-income and working-class Marylanders face. In 2011, the Clinic trained more than 167 service providers throughout Maryland. This year it will also offer tax preparation clinics for veterans.
What about Alice? Students with the Clinic persuaded the State to let Alice keep her driver’s license—and, with it, her job. Her final payment plan is still being negotiated but a resolution is expected this spring. In the meantime, Alice has a way to support her children and whittle down her tax debt.
Need help with a tax problem? Call the Clinic at (410) 706-3295.