In the face of corporate tax cuts and tax cuts for the rich, this is especially insulting. $6.5 billion to $10 billion lost money is the amount they're chasing - which is peanuts compared to what the white collar folks cheat them out of, peanuts compared to corporate welfare, and probably only a few bucks more than it will cost them to step up enforcement efforts. It is simply enforcement money spent better elsewhere - like at the airline bankruptcy golden parachutes we're now learning about.
Here's the excerpt to pay attention to to understand my ire:
Quote:
Instead of conventional welfare benefits, the earned-income tax credit provides an offset for the Social Security taxes low-income workers have already paid, along with a credit based on their earnings that is intended to give them an incentive to work. The credits vary according to income and family size, but no household with earned income above $34,692 is eligible.
The average tax credit, paid by the government by check, was $1,976 for households with children in 2001. That is less than the average food stamp benefit for households with children that year, $2,904. But the I.R.S.'s proposed rules would make it much harder to qualify for the tax credit than for food stamps.
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Anyway, read on ......
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Today's NY Times:
I.R.S. to Ask Working Poor for Proof on Tax Credits
By MARY WILLIAMS WALSH
The Internal Revenue Service is planning to ask more than four million of the working poor who now claim a special tax credit to provide the most exhaustive proof of eligibility ever demanded of any class of taxpayers.
The I.R.S., trying to prevent errors and cheating, says it needs greater proof of eligibility months before people claim the credit on their tax returns because its efforts to find errors through audits after the fact have not worked. Treasury officials estimate that $6.5 billion to $10 billion is lost to improper payments each year.
But some tax experts criticize the higher burden of proof as unfair and a wasteful allocation of scarce I.R.S. enforcement dollars. They say that corporations, business owners, investors and partnerships deprive the government of many times what the working poor ever could — through both illegal means and legal shelters — yet these taxpayers face no demands to prove the validity of their claims in advance with certified records and sworn affidavits.
Others warn that the proposed I.R.S. rules will set a standard of proof so high that it will be difficult, and in some cases impossible, for honest taxpayers to meet it. As a result, some people entitled to the tax credit will no longer receive it. And those who do manage to file successful claims will almost certainly have to pay commercial tax preparers more for helping them with the extra paperwork.
"There is this double standard," said Robert Greenstein, executive director of the Center on Budget and Policy Priorities, a research group in Washington financed mainly by large foundations. "The losses are larger in other areas of the tax code, but somehow a different standard gets applied to this."
Nina E. Olson, the I.R.S. taxpayer advocate, said in her report to Congress this year that two-thirds of audited claims for the tax credit were eventually approved.
The new rules apply to the earned-income tax credit, a provision enacted in 1975 and expanded several times. The credit has long had bipartisan support because it has lifted large numbers of people out of poverty without offering the sort of assistance often derided as handouts.
Instead of conventional welfare benefits, the earned-income tax credit provides an offset for the Social Security taxes low-income workers have already paid, along with a credit based on their earnings that is intended to give them an incentive to work. The credits vary according to income and family size, but no household with earned income above $34,692 is eligible.
The average tax credit, paid by the government by check, was $1,976 for households with children in 2001. That is less than the average food stamp benefit for households with children that year, $2,904. But the I.R.S.'s proposed rules would make it much harder to qualify for the tax credit than for food stamps.
Republicans and Democrats have both supported expanding the tax credit, but as the cost of the program has risen, many Republicans have been vehement in saying that the program is riddled with errors and fraud.
President Bush has praised the tax credit. But his administration has also complained about fraud, and the president has asked Congress for $100 million and 650 new employees to identify potentially erroneous claims before any money is paid out.
There is a similar effort with federally subsidized school lunches. Eric Bost, the under secretary of agriculture for food and nutrition, has increased efforts to weed out students who officials say are ineligible for free or subsidized school meals.
Asked about the I.R.S. proposal, the Treasury issued a statement saying it was committed to reducing "the unacceptably high error rate" and "to get the benefit to those who are entitled but only to those that truly qualify."
A Treasury official who insisted on not being identified said it was unfair to judge the size of the overpayment problem on the basis of just one year's tax credit, because the overpayments can continue year after year until each minor child listed on a false claim turns 18.
"It's a permanent thing," she said. "The I.R.S. tends to take things that are permanent very seriously, and put a lot of resources into them."
[ 04-25-2003, 02:46 PM: Message edited by: Timber Loftis ]