IRS Moves Forward With EIC Certification Plan | AccountingWEB

IRS Moves Forward With EIC Certification Plan

The Internal Revenue Service announced on Friday it would proceed with plans to implement a pre-certification procedure for certain potential recipients of the Earned Income Credit (EIC).

The plan was originally announced in April, then quickly shelved when impassioned opposition was voiced. A 30-day waiting period was announced in May to allow for public comment.

Now the IRS will move forward, planning to mail letters to about 45,000 taxpayers who claimed the EIC in the past, asking that they provide proof of eligibility before claiming the credit on future tax returns.

Those who will receive the letters include single fathers, grandparents, and other non-traditional guardians who indicated they have a child or children who lived with them for more than six months and qualified them for the credit.

Required proof will be in the form of official records and third party affidavits such as copies of marriage certificates, leases, school records, and letters from child care providers, members of the clergy, employers, landlords, or local officials.

The IRS expects to save billions of dollars by deterring improper claims for the credit.

Opponents to the plan complain that such a requirement will deter eligible people from applying for the credit as well as ineligible ones. Others complain that eligible people will have to pay for professional services to help them get the needed credentials.

Proponents of the plan compare the EIC to other forms of welfare, such as food stamps, for which recipients must provide similar forms of verification of eligibility.