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IRS EITC/FCR Update

DCL-01-11

Published: February 13, 2001
Information About:
State/Local Child Support Agencies
Topics:
Federal Systems, Data Exchange/Matching, Federal Case Registry (FCR)
Types:
Policy, Dear Colleague Letters (DCL)
Tags:
Earned Income Tax Credit (EITC), Internal Revenue Service (IRS), Location Systems

DCL-01-11

FEB 13, 2001

TO: ALL STATE IV-D DIRECTORS

RE: IRS EITC/FCR Update

This letter is being provided in an effort to keep States informed about the IRS EITC/FCR match and to relay information from a recent Federal Office of Child Support Enforcement (OCSE) meeting with the IRS.

The January IRS mailing sent to EITC/FCR matched taxpayers was intended to be an educational letter or "soft notice". As part of the EITC/FCR match process the IRS has assured OCSE and States that they will not distribute this type of mailing again. The "correction" notice to the recipients of the first letter was mailed on January 31, 2001. To further mitigate the problem, the IRS issued a press release on January 23, 2001. IRS Call Center staff have been instructed to refer taxpayers to the IRS 1-800 telephone number, not to State Child Support agencies.

Beginning February 15, 2001, for tax year 2000 returns, the IRS will factor FCR data into their system to help determine audit actions on tax returns. This will include returns where EITC is claimed. A small percentage of the taxpayers that fall into the EITC/FCR match category will receive a notice from the IRS indicating a hold has been placed on their refund regarding their EITC claim. Several of those taxpayers may be people who also received the January notice. Based upon a decision at the IV-D Director’s meeting, taxpayers responding to these notices, will not be referred to the IV-D agency by the IRS. OCSE will provide direction to the IRS as to what they can and cannot say to taxpayers regarding FCR information. While the IRS is required to disclose to a taxpayer the source of the information used to determine an audit, it cannot disclose any specific FCR information to the taxpayer. OCSE will continue discussions with the IRS about the improvement of this project, and will also relay to the IRS that audits of low income EITC families may have a chilling effect on the EITC program in general. Also as discussed at the IV-D Director’s meeting, enclosed is the child support section (pages 78-92) of Volume I of the Report to Congress on "Scope and Use of Taxpayer Confidentiality and Disclosure Provisions".

It is important that the State's Non IV-D Court agencies become familiar with this issue since Non IV-D case information is also reported to the IRS. They may be somewhat impacted by these cases as well. You may want to inform the agencies, that report Non IV-D cases to your State Child Support Agency, about the nature of this issue.

Comments concerning this issue should be directed to the OCSE Division of Federal Systems.

Thank you for your efforts on behalf of America’s children.

Sincerely,

Frank Fuentes
Acting Commissioner
Office of Child Support Enforcement

Enclosure (Available in Hard Copy Only)

cc: Regional Program Managers
ACF Regional Administrators