One Standard Form Used in the Recertification Process Is of Questionable Value to IRS; Another Is Potentially Confusing to Taxpayers

Although IRS has revised some of the correspondence it sends taxpayers as part of the recertification process, two standard forms that are an integral part of the process can lead to unnecessary taxpayer burden because they (1) are of questionable value to the recertification process and/or (2) provide the taxpayer with inadequate or confusing information. IRS Asks for Information That Can Be Difficult for Taxpayers to Obtain or Is Inconsistent with What Examiners Accept

Providing documentation to show that a child lived with the taxpayer has consistently been identified as the toughest EIC eligibility requirement to substantiate. Conclusions

Administering the EIC is not an easy task for IRS. IRS has to balance its efforts to help ensure that all qualified persons claim the credit with its efforts to protect the integrity of the tax system by guarding against fraud and other forms of noncompliance associated with the EIC. IRS’s outreach and correspondence to taxpayers and its training of examiners have improved since then.
What GAO Found

The earned income credit (EIC) is a refundable tax credit available to low-income, working taxpayers. Administering the EIC is not an easy task for the Internal Revenue Service (IRS). IRS has to balance its efforts to help ensure that all qualified persons claim the credit with its efforts to protect the integrity of the tax system and guard against fraud and other forms of noncompliance associated with EIC. Although IRS made some changes to its correspondence, improved its examiner training, and expanded taxpayer outreach, certain aspects of the recertification process continue to cause problems for taxpayers. Since the inception of the EIC Recertification Program in 1998, IRS has taken steps to improve some of the letters and forms it uses to correspond with taxpayers about the program. However, two standard forms that IRS uses in corresponding with taxpayers as part of the recertification process can lead to unnecessary taxpayer burden. IRS asks taxpayers to submit certain information as part of the process that can be difficult for some EIC claimants to obtain or is inconsistent with what many examiners consider acceptable.