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All Eyes on IRS, Rettig as Monthly Benefit Program Rolls Out

Posted on July 15, 2021

Tens of millions of checks will go out July 15 to families with children under age 18 as a closely watched IRS begins providing monthly benefits to Americans for the first time.

The checks to the families of 65 million children come from the one-year expansion of the child tax credit adopted in March in the American Rescue Plan Act of 2021 (P.L. 117-2).

“This is the biggest investment in kids, families, and the middle class since Lyndon Johnson was president,” said Senate Finance Committee member Michael F. Bennet, D-Colo., part of a group of House and Senate members pushing for the one-year expansion of the credit to be made permanent.

“Tomorrow, 39 million families across the country will receive the first monthly payments,” Bennet said July 14. He acknowledged that there would likely be “some bumps in the road” as the IRS rolls out the new benefit program, but noted that early this year “people were saying it was going to be impossible.”

One such bump is the challenge of getting some taxpayers on the fringe signed up to receive the extra child tax credits, particularly nonfilers. A senior administration official told reporters on a July 14 call about the rollout that the first of the monthly payments will actually only go to 35.2 million families, explaining that 1 million families have already opted to unenroll from the advance payments, preferring to receive a lump sum, and that some taxpayers who filed for extensions have run into problems.

In addition, the Biden administration is still devoting resources to outreach to sign up more nonfilers, and with several months left in 2021, roughly half of all new babies this year have yet to be born. Combined, that should eventually bring the number of families enrolled up to the 39 million figure, according to the official.

“This is not the ninth inning of trying to sign up; this is the start. We’re going to work at the plate, we’re going to try to make improvements as we go into 2022, but we’re very, very excited by the start that we’ve had,” the official said.

Academics estimate that expanding the credit and other programs permanently could halve child poverty in 10 years.

The change, though, is an expensive one. Increasing the child tax credit for one year from $2,000 per child to $3,600 for children under 6 and $3,000 for older children, along with other changes, will cost $108 billion, according to the Joint Committee on Taxation. The credit was made fully refundable and extended to U.S. territories, and 17-year-olds, who weren’t previously covered, were made eligible.

The rollout of the monthly benefit payment program cost the IRS $391 million for system upgrades and other improvements, IRS Commissioner Charles Rettig testified April 13 before the Senate Finance Committee. This could be a critical time for Rettig, an appointee of President Trump. Rettig has been on thin ice with some Democrats irritated by the role he played in 2019 and 2020 in denying the release of the tax returns of Trump and Trump’s businesses to House Ways and Means Committee Chair Richard E. Neal, D-Mass.

ARPA also included a directive that instead of paying the child tax credit as an annual refund, the IRS make the money available in “periodic” payments. There were questions at the time whether the payments could be made monthly.

The $1 Trillion Man

Rettig has been perhaps the most oft-quoted Trump appointee by Democrats ever since he said at the April 13 hearing that it “would not be outlandish to believe that the actual tax gap could approach, and possibly exceed, $1 trillion per year.”

That provided a boost to congressional Democrats and President Biden, who have proposed paying for a host of new spending partly by narrowing the gap between taxes owed to the federal government and taxes paid.

Biden’s fiscal 2022 budget, a bipartisan infrastructure agreement in the Senate, and an upcoming Senate budget resolution all propose tapping into increased tax collections resulting from beefed-up enforcement at the IRS. Democrats had been working off an estimate that the amount of owed taxes that the IRS failed to collect each year was around $700 billion, but Rettig’s estimate suggests more revenue could be available from increased IRS enforcement.

Before making that popular statement, though, Rettig had angered Democrats over Trump’s tax returns.

Shortly after the 2020 presidential election, Ways and Means Oversight Subcommittee Chair Bill Pascrell Jr., D-N.J., asked Rettig if he would offer his resignation to the incoming president. Pascrell has been critical of Rettig for not turning over Trump’s tax returns, even though Rettig’s boss at the time, Treasury Secretary Steven Mnuchin, made clear it was his decision not to release the returns.

When Rettig said he didn’t intend to offer his resignation to the new president, Pascrell asked him to resign instead of completing his term, which doesn’t expire until November 12, 2022. Rettig again declined.

A series of court cases, beginning with a Republican effort to remove a Consumer Financial Protection Bureau director appointed by President Obama, opened the door for Biden to remove a pair of Trump appointees — Federal Housing Finance Agency Director Mark Calabria and Social Security Commissioner Andrew Saul, who was fired July 11.

Asked if Rettig’s job might be on the line if the monthly payment program falters, Senate Finance Committee Chair Ron Wyden, D-Ore., responded, “You probably saw my comments with respect to the Social Security head.” Wyden had supported Biden’s firing of Saul, saying, “Every president should choose the personnel that will best carry out their vision for the country.”

The expanded child tax credit goes to single parents with adjusted gross income of up to $75,000 and to joint filers making up to $150,000. The monthly payments would be up to $300 for each child under 6 and up to $250 for older children.

For weeks, Democrats have been promoting the upcoming checks, which the IRS estimates will cover 88 percent of children in the country.

Biden’s American Families Plan includes an extension of the enhanced credit through 2025 at a cost of $449 billion, which is likely to be included in the $3.5 trillion budget resolution top line that Senate Democrats unveiled July 13.

A coalition of House and Senate Democrats is pushing to make the child tax credit expansion permanent. That group includes Bennet and is headed in the House by Appropriations Committee Chair Rosa L. DeLauro, D-Conn.

Jonathan Curry contributed to this article.

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