The Internal Revenue Service (IRS) will launch an Earned Income Tax Credit (EITC) certification pilot program that will help families out of poverty in 2004.
The IRS is planning to use an integrated approach to pinpoint invalid claims by identifying cases that may have the greatest percentage of errors before EITC benefits are paid. Such claims are classified as "high risk" for the government because of the amount of invalid payments.
"The EITC program helps lift millions of working families, especially single mothers, out of poverty each year. But it has consistently been found to have an erroneous payment rate higher than many other government benefit programs. To protect the long-term viability of this critical program, we must ensure those who qualify receive the credit they are due - but only those who qualify," IRS Commissioner Mark W. Everson said. "After reviewing many constructive public comments, we have identified a number of steps we can take to improve the certification pilot and strengthen the integrity of the EITC program."
The pilot program will be implemented during the 2004-filing season. The IRS plans to ask 25,000 EITC claimants to verify that an eligible child lived with them for more than six months as the law requires.
Starting in 2004 will allow EITC claimants to have access to certification information over a critical period. In addition, the IRS hopes to improve the form for the pilot program, and reduced the number of participants in the study from 45,000 to 25,000 in order to obtain more accurate data.
"Our goal is a fair and balanced EITC program - one that clearly encourages eligible people to apply while reducing erroneous claims," Everson said. "We want to make sure this pilot meets those important standards."
The EITC is tax refundable credit for low-income taxpayers. It was reported that approximately 19 million individuals claimed more than $32 billion in EITC in 2002. The new program hopes to help families with children receive a larger refund.
Source: IR-2003-97 News Release