The IRS lacks the authority to verify federal grant eligibility for lower-income taxpayer clinics, the agency's watchdog found.

The Treasury Inspector General for Tax Administration said in a report issued Jan. 15 but released Tuesday that the Low Income Taxpayer Clinic Program Office doesn't have the authority to verify whether clinics that receive grant money to represent mostly low-income taxpayers are eligible because Office of Management and Budget rules prohibit it from viewing participants' information. Under attorney-client privilege, the program is restricted from accessing taxpayer information held by lawyers or tax practitioners.