SERVICE PROVIDES EXAMPLE OF WORDING THAT MAY SATISFY EARNED INCOME CREDIT NOTIFICATION REQUIREMENT.

SUMMARY:

This notice provides an alternative way to satisfy the notification requirement of section 31.6051-1(h) of the Employment Tax Regulations. Section 31.6051-1(h) requires employers to notify certain employees whose wages are not subject to income tax withholding that they may be eligible for the refundable earned income tax credit.

Section 31.6051-1(h)(1) of the regulations provides that notification shall consist of Notice 797, Notice of a Possible Federal Tax Refund Due to the Earned Income Credit (EIC), or a written statement that contains an exact reproduction of the wording contained in Notice 797. Section 31.6051-1(h)(3) provides that if an employee is furnished a Form W-2 in a timely manner, notification may be furnished along with the employee's Form W-2.

If an employer furnishes a substitute Form W-2 to an employee and the copy of the substitute Form W-2 to be retained by the employee contains the following language, it will be deemed to be an exact reproduction of the wording contained in Notice 797 for purposes of section 31.6051-1(h)(1):

LANGUAGE TO BE INSERTED AT THE BOTTOM ON THE FRONT OF THE COPY TO BE RETAINED BY THE EMPLOYEE

SEE BACK OF THIS COPY FOR IMPORTANT EARNED INCOME CREDIT INFORMATION.

LANGUAGE TO BE INSERTED ON THE BACK OF THE COPY TO BE RETAINED BY THE EMPLOYEE

For 1989, if your income is less than $19,340, and at least one child lives with you in a home in the U.S., you may qualify for the earned income credit (EIC). For 1989, the EIC can be as much as $910. Any EIC that is more than your tax liability is refunded to you, but ONLY if you file a tax return. For example, if you have no tax withheld, have no tax liability and qualify for a $300 EIC, you could get $300, but only if you file a tax return. Notice 797, the 1989 instructions for Forms 1040 and 1040A, and Publication 596, explain the EIC in more detail. You can get the notice, the instructions, and the publication from IRS offices or by calling the IRS toll-free telephone number 1- 800-429-3676.

Rev. Proc. 89-41, 1989-28 I.R.B. 12, provides additional guidance applicable to substitute Forms W-2.

This document serves as an "administrative pronouncement" as that term is described in section 1.6661-3(b)(2) of the Income Tax Regulations, and may be relied upon to the same extent as a revenue ruling or revenue procedure.

DRAFTING INFORMATION

The principal author of this notice is Joel S. Rutstein of the Office of Assistant Chief Counsel (Income Tax and Accounting). For further information regarding this notice, contact Mr. Rutstein on (202) 566-4430 (not a toll-free call).