IRS Use of Federal Case Registry Information

DEAR COLLEAGUE LETTER

DCL-01-03

DATE: JAN 16, 2001

TO: ALL STATE IV-D DIRECTORS

RE: Internal Revenue Service's (IRS) Use of Federal Case Registry (FCR) Information

Dear Colleague:

Last year, DCL 00-60 dated May 22, 2000 informed you that the U.S. Department of Health and Human Services (HHS), Federal Office of Child Support Enforcement (OCSE), is providing FCR data to the IRS for the purpose of administering those sections of the Internal Revenue Code of 1986 which grant tax benefits based on support or residence of children.

The IRS pilot project evaluating the use of FCR data is completed, and the IRS has begun matching the latest FCR data against the 1999 tax file for the entire country. As part of this process, the IRS sent in the first week of January a notice to matched taxpayers that alerts them that the IRS has detected a problem regarding their eligibility for the Earned Income Tax Credit (EITC) as a result of information received from the FCR. A draft copy of the text of that notice is attached.

OCSE had requested to review and comment on the notice prior to its finalization; however, the IRS proceeded to print the notice without our review and approval. Our concern is that in its taxpayer notice, the IRS characterizes "child support" information provided by the FCR as "custody" information. The IRS instructs the taxpayer to contact the State Child Support agency to correct the information maintained by the State Child Support agency if the taxpayer believes this "custody" information from HHS to be inaccurate. The notice does not clarify when the individual should contact the State Child Support agency versus the IRS. We understand this notice is creating problems for some State CSE agencies. We are concerned that State Child Support agencies are receiving all manner of questions regarding the taxpayer notice, EITC, or custody, and that your staff cannot help the taxpayer due to the nature of these inquiries. Taxpayers making such inquiries should be referred to the IRS. The notice provides an IRS telephone number to call (1 800-829-1040). We have alerted the IRS to the problems being experienced by the State Child Support Offices, and they in turn have been working with their Customer Help Desk to resolve the issues with the taxpayers when they call the IRS.

Attached is a "Guide For Handling Inquiries From Persons Who Indicate They Have Received A Notice From The IRS Regarding Their Claim For Earned Income Tax Credit (EITC)". Please distribute this Guide to staff that may be involved with answering calls originating from the IRS notice. It should help in understanding the nature of the problem and what to discuss with the callers.

Also attached is table summarizing the IRS EITC/FCR Matches by State.

On a positive note, the IRS has assured us that any future EITC project notices based upon FCR data will be shared with OCSE beforehand.

If you find that this notice is creating problems for your agency, please let us know so that this information can be shared with the IRS as we continue to work with them to improve this notice. Share your experiences and concerns with [Contact information is obsolete].

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

Sincerely,

Frank Fuentes
Deputy Commissioner and Acting Operating Head
Office of Child Support Enforcement

Enclosures

cc: Regional Program Managers
ACF Regional Administrators