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MSP #22: Earned Income Tax Credit (EITC)

The IRS Does Not Do Enough Taxpayer Education in the Pre-Filing Environment to Improve EITC Compliance and Should Establish a Telephone Helpline Dedicated to Answering Pre-Filing Questions From Low Income Taxpayers About Their EITC Eligibility

TAS Recommendations and IRS Responses

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TAS RECOMMENDATION #22-1

Conduct a study along the lines of the UK experiment to determine how best to serve low income taxpayers.  This study should include interviews with taxpayers, nonprofit organizations, and IRS employees, to learn about taxpayer needs and communication preferences.

IRS RESPONSE TO RECOMMENDATION: NTA Recommendation Not Adopted as Written, but IRS Actions Taken to Address Issues Raised by NTA.  To gather information similar to what is recommended, we are conducting the EITC Summit which will bring together a cross section of stakeholders from areas such as the software industry, return preparers, and government agencies, where we will solicit their concerns and suggestions on participation and compliance.  We also solicited and consider ongoing feedback on the needs of low income taxpayers through the VITA.

CORRECTIVE ACTION: N/A

TAS RESPONSE: The National Taxpayer Advocate commends the IRS for planning an EITC Summit to bring together the software industry, return preparers, and government agencies, and the plan to continue to solicit comments from the VITA and TCE communities. However, by not adopting an actual component that includes direct input from taxpayers, especially those that are not utilizing the VITA and TCE organizations, the IRS is missing out on a significant opportunity to obtain information that could be critical in developing a comprehensive plan.  The National Taxpayer Advocate is disappointed this recommendation has not been accepted and continues to believe the IRS should conduct a study along the lines of the UK experiment. The IRS can use the issues raised and knowledge gained in the EITC Summit to better design a more rigorous experiment that includes taxpayers as well as nonprofit organizations, representatives, preparers (including software developers), and IRS employees.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Partially Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

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TAS RECOMMENDATION #22-2

Based on the findings from the proposed study above, create a helpline dedicated to taxpayers who claim the EITC where taxpayers can call in and ask questions about their particular area of concern.  This phone line should be staffed by employees with excellent listening and communication skills who have completed training in social work and who can answer specific questions related to EITC eligibility. The IRS should provide, in conjunction with TAS, special training on listening and communication.

IRS RESPONSE TO RECOMMENDATION: IRS continues to promote a variety of channels for taxpayers to receive help with questions about EITC. These include the toll-free phone assistors trained in tax law and our web resources including the EITC Assistant, an on-line tool available on IRS.gov. This year, between October 2015 and March 2016, over 240,000 taxpayers used the Assistant to determine qualification for the credit and over 1.3 million accessed IRS.gov/eitc.

Our VITA and TCE partnerships, administered by our SPEC organization, provide tax preparation assistance for EITC taxpayers.  In fiscal years 2014 and 2015, they prepared about 744,000 EITC returns claiming over $1.1 billion in EITC. In FY 2016, through April 18, 2016, they prepared almost 695,000 returns claiming over $1 billion in EITC.

The IRS led the effort to deliver the tenth annual nationwide EITC Awareness Day on January 29, 2016. The IRS and partners used events and social media to increase awareness of this important credit that benefits workers and their families. Events included news conferences, news releases, e-mail blasts, newsletters and social media interactions. Over 290 local events were held. English & Spanish radio interviews were held with 575 radio stations. The same interviews provided access to over 1,500 local stations. The IRS and its partners tweeted over 2,400 English tweets reaching over 2.6 million Twitter followers and yielded over 5.8 million touches on individuals’ Twitter timelines during Awareness Day.  The EITC Awareness Day Thunderclap (which is a social media tool that allows organizations, partners and individuals to join together to blast a message of support at the same time to all of their followers social media) had 255 supporters with a potential reach of 372,970 people.

CORRECTIVE ACTION: N/A

TAS RESPONSE: TAS is disappointed the IRS is not implementing this recommendation. The IRS indicates toll-free phone assistors are trained in tax law.  However, the IRS has stopped answering any tax law questions outside of filing season.  Couple this with VITA sites only being open during filing season and a void for assistance is created.  Lengthy wait times impact taxpayers because fewer taxpayers are being assisted, and taxpayers must use their limited minutes waiting on the phone for assistance.  Moreover, while VITA and TCE sites perform an important service, they served only about 744,000 EITC taxpayers out of the 27.5 million claiming the EITC annually.59 And while the EITC Awareness Day is a very important initiative, it is geared to deliver a broad message, not one targeted to the specific questions of a specific taxpayer relating to their specific facts and circumstances. Neither of these initiatives are a substitute for person- to-person assistance.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Partially Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

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