July 30, 2019 - Douglas Myser

IRS to improve EITC program. National Taxpayer Advocate Nina Olson has released a special report on the Earned Income Tax Credit, EITC, which makes recommendations designed to increase the participation rate of eligible taxpayers and reduce overclaims by ineligible taxpayers. The Taxpayer Advocate Service published a subway map that depicts a taxpayer's "journey" through the tax system to help taxpayers and policymakers better understand the tax administration process. The EITC report, Earned Income Tax Credit: Making the EITC work for Taxpayers and the Government, presents a detailed examination of the strengths and weaknesses of the EITC as currently structured and administered, and makes legislative and administrative recommendations to improve it. The report runs more than 100 pages--roughly half text and half appendices consisting of EITC data table and a comprehensive literature review. IRS to improve EITC program.

"But this report is not just a research document," Olson wrote in her preface. "It is a call to action. As we show throughout this report, the way the EITC is structured and the way the IRS is administering it often harms the very taxpayers it is intended to serve. We have made specific, common sense recommendations to mitigate that harm and reform the administration of the EITC.  All our recommendations are actionable and supported by data and research. If you have been unable to reach the IRS, and have a tax debt that needs to be resolved, call this 35 year old Tax Resolution firm to help you determine every option in the Internal Revenue Code for dealing with your debt, including the options inside and outside the IRS Fresh Start Program.

The IRS, which views itself primarily as a tax collection agency, should more explicitly acknowledge that it has a second mission--that of administering benefits programs like the EITC. Benefits administration requires a different approach from tax collection, including hiring employees with different skill sets and creating a separate set of practices and processes to carry out this second mission. While preventing improper payments is an important part of its job, the IRS should also strive to ensure that low income working taxpayers receive the benefits for which they are eligible and are treated with respect and fairness. The report points out that eligible taxpayers often lose out on benefits to which they are entitled.