A lawyer in California is seeking $150,000 in legal fees from the IRS after the agency threatened to fine the group if it didn’t comply with a court order.
The legal aid organization, known as LAS, sued the IRS in March, saying it was facing a “substantial risk of forfeiture” if it failed to comply with the order.
The legal aid group had sued the agency on behalf of a New Jersey woman who claimed her health insurance plan was cancelled for refusing to provide medical assistance for a stroke and her attorney, a local attorney, said they would file suit if the IRS continued to withhold their fees.
“I am very concerned that the IRS is going to use a new rule, which is called the ‘payroll tax,’ as a tool to target the LAS,” said Andrew Lauten, the executive director of LAS.
“It is a huge threat to the legal aid network.”
The IRS, in its order, wrote that the legal services organization’s failure to provide a letter of credit to the state “could result in the organization being assessed a penalty for unpaid taxes.”
The legal services group says it will appeal the order, and is seeking to have the IRS’s action thrown out.
The Legal Aid Foundation is an umbrella group of more than 1,000 legal services organizations in Southern California.
LAS is not a legal aid association.
The IRS says the legal assistance organization’s attorney is not involved in the case.
The IRS says it has no legal authority to take such action.
The agency’s enforcement actions have become increasingly controversial since the 2016 presidential election, when then-candidate Donald Trump made disparaging remarks about the legal system.
He later reversed course and apologized for the remarks.