What is the EITC Qualifying Children (QC) residency certification test?
The most recent study of EITC claims found that between 27 percent and 32 percent were erroneous. Though the IRS has implemented several legal and administrative changes to address the high erroneous payment rate since that time, we believe the error rate is still significant. One of the most common errors taxpayers claiming the EITC make is incorrectly claiming a qualifying child. Therefore, the IRS is testing a new approach to reduce this type of error.
The EITC Qualifying Children (QC) residency certification test requires selected taxpayers to show that the child(ren) they are claiming for the purposes of EITC lived with them in the United States for more than half the tax year. Taxpayers in the test should complete and return their documentation as soon as possible to avoid potential delays in receiving the EITC portion of their refund.
The goal of the certification test is to evaluate the potential for a certification requirement to help the IRS maximize participation by eligible taxpayers and minimize the number of claims paid in error.
Why is IRS conducting the EITC Qualifying Children residency certification tests?
A taskforce commissioned by the Secretary of the Treasury recommended that the IRS consider imposing a certification requirement on certain taxpayers as a means of reducing erroneous payments. The certification process we are testing is designed to be less burdensome to taxpayers and less costly to the government than more extensive EITC audits.
Who is affected by the EITC Qualifying Children residency certification test?
The test is composed of 25,000 taxpayers who claimed qualifying child(ren) for the purposes of the EITC on their individual federal income tax return. Test participants are taxpayers for whom the IRS is unable to verify – either through existing databases or statistical analysis – that these taxpayers are likely to have lived with the qualifying child(ren) they claimed for more than half of the tax year.
How does each year of the certification test, 2004, 2005, and 2006, differ?
Each test year differs in several ways:
-
In 2004, we sent the taxpayers two letters, and asked taxpayers to send their certification documents only when they filed their returns.
-
In 2005, a portion of the taxpayers were drawn from a single community. We mailed the taxpayers three pieces of mail, and gave taxpayers the option to provide certification documents prior to filing their returns.
-
In 2006, we improved the selection methodology and added some enhancements to our telephone routing system.
Does the IRS have plans to make certification a requirement for all taxpayers claiming the EITC with qualifying children in the future?
We currently have no plans to impose a qualifying child certification requirement on a nationwide basis until we complete a thorough evaluation of the 2004, 2005, and 2006 tests, and engage key stakeholders in all decision making – from test development, throughout the testing phase, and any discussion of rolling out a certification requirement in the future.
What should taxpayers involved in the 2006 test do?
Taxpayers in the certification test should Complete Form 8836 and attach documentation that shows their child(ren) met the residency requirement. A qualifying child must have lived with the person claiming the EITC in the United States for more than half of 2005 (at least 183 days). See Pub 596 for more details on the residency test.
We encourage taxpayers in the certification test to return Form 8836 and related documentation as soon as possible, but no later than the date they file their 2005 tax returns. Taxpayers who submit their documentation prior to filing their tax return will avoid the potential delays in receiving the EITC portion of their refund that can occur during the press of the tax filing season.
Where should taxpayers send certification documents if they want to send them before filing their tax returns?
Taxpayers in the certification test may send Form 8836 and related documentation, prior to filing a tax return, to the following address:
Internal Revenue Service
EITC Operations, STOP 4300, Annex R2
Kansas City, MO 64999-0065
A taxpayer may also fax Form 8836 and related documentation to 1-913-266-9640. Please note that this is not a toll free number. Tax returns are not accepted by fax.
Where should a taxpayer send certification documents with a tax return?
While taxpayers are encouraged to certify before filing their tax returns, beginning in January 2006, taxpayers who opt to submit Form 8836 and related documentation with their tax returns with should sent all materials to:
Internal Revenue Service Center
Kansas City, MO 64999-0002
Reminder: Taxpayers in the certification test should not send their tax returns to the address listed in their tax return instructions, if that address is different from the address directly above.
What kind of documentation do taxpayers need to prove a qualifying child lived with them for more than half tax year?
Acceptable proof of a qualifying child’s residency includes copies of records, such as school, child care, social service, or medical records, signed letters on official letterhead, or a Third Party Affidavit (Schedule A or B). In some cases, taxpayers may need to obtain more than one document to prove the child lived with them more than half the tax year.
Does everyone who wants to claim the EITC have to certify?
No. Only those taxpayers who have been asked to certify by the IRS must certify. If taxpayers did not receive a certification letter from the IRS, then they do not have to provide additional documentation.
What should a taxpayer do if he/she has moved since filing last year’s return and wants to verify if he/she is part of the test group?
The taxpayer can call 1-800-829-1040 to determine whether he/she is in the EITC QC residency certification test group.
How should a taxpayer get help if they have questions about the notice or Form 8836?
Taxpayers can get help by calling a special toll-free number dedicated to the EITC certification test at 1-800-829-6088. Assistance is available Monday through Friday, from 8 a.m. to 8 p.m. local time. If taxpayers normally seek tax preparation help from a tax professional, that tax professional also can assist them. If taxpayers qualify, they can get help from a Low Income Taxpayer Clinic.
What if a taxpayer loses the notice, Form 8836 or any of the attachments?
A taxpayer may request replacements by calling a special toll-free number dedicated to the EITC certification test at 1-800-829-6088. We will send the appropriate forms. Schedules A and B are not available on our website, and are only available by calling this special number.
What should taxpayers do if their child didn’t live with them for more than half the year in 2005?
If the child did not physically reside with a taxpayer for more than half the year in 2005, the child does not qualify for the purposes of claiming the EITC. Therefore, the taxpayer should not claim the EITC with a qualifying child. However, the taxpayer may still qualify for a reduced EITC if income meets certain requirements. (For a more detailed description of the EITC rules, please refer to Publication 596)
What should taxpayers do if they received Form 8836, but they are not claiming the EITC this year?
If a taxpayer is not claiming EITC on his/her 2005 individual federal income tax return, he/she does not need to submit Form 8836, and should disregard the notice and instructions.
What happens after a taxpayer files Form 8836 and provides proof of their child’s residency?
After taxpayers file Form 8836 and related documents, we will review the materials. If we need additional information, we will notify these taxpayers. We will advise them of our determination, usually within 4 to 6 weeks, and if they are eligible for the EITC, they should receive their refunds, less offsets to back taxes, delinquent child support, or other federal debts they may owe, soon afterward.
What will happen if a taxpayer doesn’t complete and mail Form 8836?
If a taxpayer was selected for the QC certification test and files a tax return claiming the EITC with a qualifying child without submitting Form 8836 and related documentation, we will send him or her a Notice 75B advising that the EITC portion of any refund will be held pending receipt and review of the requested Form 8836 and documentation. If the taxpayer does not respond, we will send two additional letters requesting the documentation. If the taxpayer still does not respond, we will send a Statutory Notice of Deficiency, and we will deny the EITC claim.
Will taxpayers’ refunds be affected if they are in the QC residency certification test?
Yes, taxpayers in the certification test will receive the EITC portion of their refund only after we review the documentation and determine their eligibility. It takes approximately 60 days after a taxpayers provide proof of their qualifying child(ren)’s residency to determine EITC eligibility. Once we determine that taxpayers qualify for the EITC, they will receive the EITC portion of their refund. The sooner taxpayer’s provide the requested information to us, the sooner we evaluate the materials, make our determination, and send a refund.
The certification test will not affect any refund taxpayers receive due to federal income tax withholding or other refundable tax credits. They will receive this part of their refund separately within 2-8 weeks of filing, depending on whether they file electronically or on a paper return, and whether they request a direct deposit to a financial institution account or a have check mailed to their address. Electronic filing with direct deposit is the fastest, safest, easiest way to receive a refund.
What can taxpayers do if they have an emergency and need their EITC quickly?
If the emergency is causing the taxpayer a hardship, he or she should call the Taxpayer Advocate Service in Kansas City at 816-926-2493.
What happens if the IRS determines a taxpayer does not qualify for the EITC?
If we disallow a taxpayer’s EITC claim, we will send that taxpayer a letter explaining why the provided documentation did not adequately show that the child(ren) claimed met our eligibility requirements. If the taxpayer would like us to consider other documentation, he or she should mail that information to the address in our letter. Taxpayers should call the telephone number on the letter for more information.
What if a taxpayer disagrees with IRS’ determination?
If a taxpayer disagrees with our determination, he or she may appeal our decision through the IRS Appeals Division, or petition the Tax Court. For more information about appeal rights, see Publication 1, Your Rights as a Taxpayer.
Taxpayers may also qualify for assistance through a Low Income Tax Clinic. See Publication 4134, Low Income Taxpayer Clinic List, for more information.
Will taxpayers’ state tax returns be affected if they don’t qualify for the EITC?
Under a federal/state data exchange agreement, the IRS shares information about adjustments on federal income tax returns with state tax departments.
If taxpayers claimed a state tax credit comparable to the EITC, and we determine they do not qualify for the EITC, there may be a corresponding adjustment on their state income tax return. Taxpayers should contact their state tax office for more information.
What is the effect on a taxpayer’s advance Earned Income Tax Credit (AEITC) if that taxpayer doesn’t qualify the EITC?
Depending on a taxpayer’s tax liability, total withholding, and other refundable tax credits, a taxpayer who is not eligible for the EITC may need to repay part or all of his or her advance EITC payments received during 2005. If taxpayers owe additional tax, we will notify them after determining their EITC eligibility.
Are certification documents, including Form 8836 available in Spanish?
Form 8836 and Schedules A and B are available in Spanish. Taxpayers can request these materials by calling the special EITC certification hotline at 1-800-829-6088. They may also ask to speak with a Spanish-speaking assistor.
How can taxpayers check the status of the review of their documentation?
Taxpayers can use EITC CERT, a web-based tool, to determine if they are part of the test and to review the status of their certification documents. They will be prompted to enter information from their most recently filed returns. Once this information verifies that a taxpayer is a Selectee, EITC CERT will show the current status of his or her certification along with other information. For instance, if taxpayers want a list of documents that will be considered, they can click on a link to see the list. Similarly, they can find the address or FAX number of where to send their documentation.
|