House Fails in Effort to Stop EIC Pre-Certification Program

Democrats in the House of Representatives failed last week in their attempt to prevent the Earned Income Credit (EIC) pre-certification program that was approved by the Internal Revenue Service last month.

The pre-certification program, scheduled to go into effect in 2004, will affect an initial test group of 25,000 possible candidates for the EIC. Members of the group, made up of non-married individuals and single mothers who claimed the tax credit in previous years, will be asked to provide proof of their eligibility to receive the tax credit. The IRS hopes this program will cut down on the number of fraudulent requests for the tax credit. It is estimated that the IRS loses somewhere between $6.5 billion and $10 billion annually to false claims for the EIC.

Nearly 19 million taxpayers claim the credit each year. The pre-certification program is only targeting a portion of those taxpayers who are considered to be "high risk" by the IRS. Originally the IRS wanted to include 45,000 in the pre-certification group. After hearing comments and considering arguments both for and against the pre-certification program, the IRS reduced the target group to 25,000. The 2004 results of the pre-certification program will be used to determine the need to continue and possibly expand the pre-certification program in the future.

House Democrats argued that no other tax credits require a pre-certification process and attempted to quash the program with a vote. House Republicans, meanwhile, argued that no other tax credit attracts such rampant fraud and compared the credit to other welfare programs, all of which require proof of eligibility.

The House voted 219-192 to keep the pre-certification program in place.

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