Murray Comments on EITC Precertification Plan

[1] I write in response to the proposed Earned Income Tax Credit (EITC) compliance initiative pilot program. Included are comments with regard to evaluation of the pilot, the affidavit, and adequate provision of information to claimants.

Evaluation

[2] Before expansion of the pilot pre-certification beyond the initial group of 45,000 filers, the IRS should complete a comprehensive evaluation that demonstrates that pre-certification is effective in reducing overpayments and that it can be conducted without deterring eligible filers. The evaluation should measure both the effect of the pre-certification procedure in reducing overpayments and the degree to which eligible filers are deterred from participating in the EITC. If the pilot is found to adversely impact the participation rate of eligible EITC claimants, the pilot should not be expanded. In fact, given the likelihood that this initiative could have a chilling effect on EITC participation, IRS should conduct a pilot involving only as many families as is needed to realize a statistically significant result, which could mean that fewer than 45,000 families need be affected.

Affidavit

[3] The proposed procedures for pre-certification only allow licensed child-care providers to sign an affidavit for a claimant while relatives and neighbors who care for children are not eligible to do so. As most low-income individuals do not use a licensed child-care provider due to the cost, this will be a serious impediment for many EITC claimants. GAO noted in a report on "Opportunities to Make [EITC] Recertification Less Confusing and More Consistent" that, "refusing to accept child-care statements from relatives can pose a hardship for low-income taxpayers who use relatives for child care". I urge you to change the proposed form so that any day-care provider over the age of eighteen, who is not a spouse or dependent of the taxpayer, can sign the affidavit.

[4] IRS should also consider expanding the types of third parties allowed to provide an affidavit based on personal knowledge. Examples include neighbors, roommates or co-tenants, and school bus drivers.

[5] Additionally, the affidavit section of Form 8836 asks signers to attest to personal knowledge or have records indicating that a child lived between specific dates with the taxpayer at a specific address. While signers may feel confident the child lived with the taxpayer for most of the year, they may not have such specific knowledge of the particular day of the month. Under penalty of perjury, some third parties may be intimidated from attesting to such specific dates and specific addresses, fearing they could be in error. The affidavit should be revised to ask questions enabling signers to state their awareness that the child and taxpayer lived together during a particular time period (between certain months, not specific days) and to indicate at which address or addresses the child and taxpayer reside. Instead of "penalty of perjury" language, the affidavit should instruct signers that they are providing information to assist the IRS to enforce tax laws and that they are responsible for the truthfulness of their statements. This, plus the statement on the form that the IRS may contact those signing the affidavits, should be sufficient. The fact that this is an IRS form which states the IRS may contact those filling out the affidavit should be sufficient to protect the integrity of this process.

Provision of adequate information

[6] Understandably, taxfilers receiving the proposed forms in connection with the EITC compliance pilot may be confused about the initiative. In order to allay fears that could result in a reluctance to file for the EITC, IRS should, when mailing out the new forms, take care to properly instruct and address questions that may arise. For example, answers to questions such as why the notice is arriving so far in advance of tax season, what kind of assistance is available to EITC claimants, and why the person must be pre-certified, will be important to address.