WASHINGTON – As the deadline to file Federal tax returns draws steadily closer, 25,000 low-income Americans who apply for the Earned Income Tax Credit will face additional checks of their data and returns before they receive their credit. The Internal Revenue Service estimated that 21 million taxpayers claimed the EITC in 2002, bringing them $35 billion in credits. Some of these taxpayers obtained their credit through filing their returns at Volunteer Income Tax Assistance centers sponsored by credit unions and often opened credit union accounts with some of the money. But IRS and independent studies have shown "extremely high erroneous payments" the agency said in a fact sheet about the program. One recent study found that $10 billion of the payments, almost a third of the claims made, were in error in 1999. "From our perspective it's not just protecting the taxpayers money," explained Rebecca Harrell, an analyst with the agency. "It's also making sure that money is available for more people who really qualify for it. Money spent on erroneous returns can't be spent on properly filed returns." To try to correct the errors and measure program performance, the IRS has said it will make a series of internal changes to its processes. But it will also send questionnaires to some of the EITC recipients about their returns. Somewhere in the order of 25,000 EITC taxpayers will be asked to verify that a child or children that they have claimed for the EITC have actually resided with them in the U.S. for more than six months as program requires. The agency will also review the returns of 300,000 taxpayers who claimed the credit in the past but who were later found to have too much income to qualify. An additional 36,000 taxpayers will be asked to prove that they are in fact single or the head of households, another requirement in the program. Harrell noted that a very small percentage of taxpayers who apply for the EITC will be affected by these tests and she said the agency urged credit unions and other VITA sponsors to encourage taxpayers who might qualify for the credit to apply. She added that the agency had advised the VITA sponsors about how to help taxpayers who might be part of the tests. Taxpayers who are being asked to verify their relationships with claimed children have already been sent a form, the agency said, which needs to be completed and included with the return asking for the EITC. Volunteer tax preparers need to ask their low income clients if they received a form and help them with information and contacts if they are not sure if they were sent one or might have mislaid one. "We look forward to helping low income people obtain money for which they are eligible," Harrell said. "We will just need the help of our local volunteer preparers in expediting the process," she added. -

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