IRS asks some working poor to prove they qualify for credit

WASHINGTON -- The Internal Revenue Service said Friday it will ask thousands of taxpayers to submit proof later this summer that they qualify for a credit designed to lift the working poor out of poverty.

The new paperwork is designed to reduce billions of dollars in erroneous payments made each year through the earned income tax credit. The Treasury Department has traced many of the overpayments to people other than single mothers or married couples -- such as single fathers, grandparents and other relatives -- who care for children. Although such people may be eligible for the tax credit, many apply for it without meeting the requirements.

In a pilot study this summer the IRS will ask 45,000 of those taxpayers to prove the child lived with them for more than six months. They will be contacted in August and asked to submit records or a letter from child care providers, clergy, employers, landlords or local officials.

The agency dropped plans to ask the caregivers to prove their relationship with the child. Critics had said the requirement would deter many people from claiming the credit because they would not be able to document the relationship.

The IRS said it also will seek out married couples who illegally file as single taxpayers to claim a bigger credit.

"Our goal is for all taxpayers who are qualified, and only those who are qualified, to receive the EITC benefit," said IRS commissioner Mark Everson.

At the same time, the IRS said it will try to expand its outreach and encourage more qualified taxpayers to claim the credit, while also reducing the backlog of audits on people who claimed the credits.

About 19 million taxpayers -- roughly one in seven -- claimed a credit in 2002 for a total of more than $32 billion.

----

On the Net

Internal Revenue Service: www.irs.gov/