IRS Correspondence to Taxpayers on Earned Income Credit Recertification

GGD-99-112R: Published: Jul 30, 1999. Publicly Released: Jul 30, 1999.

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Pursuant to a congressional request, GAO reviewed the Internal Revenue Service's (IRS) implementation of the Earned Income Credit (EIC) recertification requirement, focusing on the purpose of certain form letters that IRS has been sending to taxpayers in conjunction with this recertification process.

GAO noted that: (1) some of the correspondence IRS has been sending taxpayers in conjunction with the EIC recertification process could confuse taxpayers and result in additional burden for taxpayers and IRS; and (2) specifically: (a) a letter that IRS uses to tell taxpayers that it has disallowed their EIC claim contains irrelevant information that could cause taxpayers to not file a claim to which they might be entitled or to call IRS seeking clarification; (b) two letters that IRS uses to correspond with taxpayers who have submitted information in an attempt to certify their eligibility for the EIC contain inconsistent information on the length of time taxpayers will have to wait to receive their refunds; and (c) a letter and form that IRS uses to tell taxpayers that it needs additional information to verify their EIC eligibility could burden taxpayers by causing them to send IRS much more documentation than called for by IRS' operation procedures.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: IRS revised letter 3094 to delete the paragraph relating to fraud and negligence.

    Recommendation: To avert potential taxpayer confusion and avoid unnecessary taxpayer burden, the IRS' Chief Operations Officer should revise letter 3094 by either: (1) making the paragraph relating to reckless or intentional disregard of the law and fraud an optional paragraph to be used only when it is relevant; (2) restricting letter 3094 to cases that do not involve reckless or intentional disregard of the law or fraud, thus negating the need to ever use the paragraph in question, and devising a separate form letter for taxpayers whose EIC claims are disallowed for those reasons; or (3) rewording the paragraph to make it clear that it does not apply to specific audit finding covered by the letter but is being provided to alert taxpayers to the potential consequences if they continue their noncompliant behavior.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  2. Status: Closed - Implemented

    Comments: IRS discontinued letters 3177 and 3183 and replaced them with two other letters that contain consistent refund issuance time frames.

    Recommendation: To avert potential taxpayer confusion and avoid unnecessary taxpayer burden, the IRS' Chief Operations Officer should revise letter 3177 and letter 3183 so that consistent refund issuance timeframes are cited in both letters.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  3. Status: Closed - Implemented

    Comments: Letter 3184 has been discontinued and two new letters are being used that are consistent with the recertification requirements.

    Recommendation: To avert potential taxpayer confusion and avoid unnecessary taxpayer burden, IRS' Chief Operations Officer should make the documentation requirements in letter 3184 and Form 886 H more consistent with the requirements in IRS' internal recertification guidelines.

    Agency Affected: Department of the Treasury: Internal Revenue Service

 

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