DCL-02-27, Internal Revenue Service (IRS) Letter to EIC Taxpayers

DCL-02-27

DATE: October 1, 2002

TO: ALL STATE IV-D DIRECTORS

RE: INTERNAL REVENUE SERVICE (IRS) LETTER TO EIC TAXPAYERS

Dear Colleague:

The IRS is preparing to send a notice in November 2002 to 27,500 selected taxpayers receiving an Earned Income Credit (EIC). The taxpayers will be selected on the basis of a combination of information contained in the IRS Dependent Database. The Dependent Database includes, among other sources, information obtained by the IRS from the Federal Case Registry. As many of you may be aware, the IRS sent a letter to 286,000 selected EIC taxpayers in December 1999. This earlier letter had a severe impact on child support operations. The Federal Office of Child Support Enforcement (OCSE) worked with the IRS to correct that problem and mitigate the harmful impact on state child support offices.

As part of our ongoing dialogue with IRS officials, they are sharing information concerning the new notice with us. A draft of the new notice is attached.

We have prepared the following Q&A concerning this notice that may be helpful to you.

Q. Who will answer taxpayer questions?

A. The IRS has directed in the notice that taxpayers call the IRS with any questions about the notice or their eligibility for EIC. The toll-free number the IRS is providing for this purpose is 800-477-5379. The IRS is centralizing this function. By centralizing the calls, the IRS will ensure that the telephone assistors are fully trained on EIC requirements.

Q. What will IRS telephone assistors say to the taxpayers who believe they are eligible for EIC or who are not certain of their eligibility?

A. The designated IRS telephone assistors will guide taxpayers through eligibility requirements. If the taxpayer is eligible for EIC, he or she will be told to retain any documentary evidence and take no further action. If he or she is not eligible for EIC, the taxpayer will be told to file an amended tax return and not claim the credit in future years unless eligibility is met.

Q. Will IRS telephone assistors handling the calls from these notices know what specific dependent database information caused the notice to be generated? Will they be referring any of the taxpayers to child support offices to "correct information"?

A. No. The telephone assistors will only know that this letter pertains to the issue of qualifying dependents for EIC. They will not have any information regarding child support offices to make any referral of this type, nor will they receive any instructions to do so.

Q. What is Notice 1230 mentioned in the letter?

A. This notice explains the basic EIC and dependency eligibility rules. A copy is attached.

Q. What should a child support office do if calls are received relating to the notice or EIC eligibility?

A. The taxpayer should be referred to the IRS toll-free number above if the call is related to the notice. Other, unrelated, calls should be referred to the general IRS toll-free assistance number 800-829-1040 as they would under normal circumstances.

The process related to this notice is designed to eliminate problems previously encountered, and we believe this new notice will not adversely impact state child support operations. We support the IRS efforts to reduce EIC errors and fraud. It is good government.

If you have questions, contact George Laufert at (202) 205-3605 or glaufert@acf.hhs.gov.

Sincerely,

Sherri Z. Heller, Ed.D.
Commissioner
Office of Child Support Enforcement

Attachments

cc: Regional Program Managers
ACF Regional Administrators

IRS Notice 1230 - Earned Income Credit (Adobe Acrobat Document)

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DRAFT OF NEW NOTICE

Dear Taxpayer:

Please help us resolve a question about your [yyyy] tax return on which you claimed Earned Income Credit (EIC). The qualifying child(ren) whose SSN is shown below may not have met the residency requirement that would qualify you to claim the Earned Income Credit. The child must have lived with you in the United States for more than half of [yyyy] and for a full year for foster children.

The social security number(s) is: xxx-xx-xxxx

What You Should Do If you Are Entitled to EIC

If you determine that you are entitled to EIC, please call us at the telephone number shown above. Please do not send any written correspondence or documentation.

What You Should Do If You Are NOT Entitled to EIC

If the child(ren) did not meet the requirements for you to qualify for EIC, file an amended [yyyy] tax return. We have enclosed Form 1040X, Amended U.S. Individual Income Return, for your convenience. The mailing address is in the enclosed instructions.
Please make sure the child(ren) meets EIC requirements before claiming EIC on future tax returns.

What You Should Do If you Are Not Certain If You Are Entitled to EIC

Refer to the enclosed Notice 1230, Earned Income Credit (EIC), or
Talk to your tax advisor or the person who prepared your tax return, or
Call us at the toll-free telephone number shown at the top of this page. The IRS representative will be able to help you.

Thank you for your cooperation.

Sincerely,

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