At least one in five workers eligible for the Earned Income Tax Credit will leave that money on the table this tax season, and Congress is looking to accountants and other tax professionals to help address the problem.During hearings before the House Ways and Means Oversight Subcommittee, congressional leaders said that while 22 million low-income families and individuals claimed EITC wage subsidies last year, millions more who are eligible for the tax credits don't receive them.
"An estimated 20 to 25 percent of eligible workers fail to claim the Earned Income Tax Credit each year," subcommittee chair John Lewis, D-Ga., said in announcing the hearings. He called on volunteer organizations representing accounting firms and other businesses to help make low-wage workers aware of these income subsidies.
The subcommittee's effort to expand access to the EITC represents a marked shift in emphasis since Lewis and other Democrats took control of Congress earlier this year.
First enacted in 1975, the EITC is a refundable credit that reduces or eliminates the taxes that low-income working people pay - i.e., payroll taxes - and frequently operates as a wage subsidy for low-income workers.
Under the GOP's leadership, congressional interest in the EITC program focused on the waste, fraud and corruption associated with that program. Government investigators estimate that between $8 and $10 billion of taxpayer money is lost annually due to inappropriate or fraudulent EITC payments.
Critics, however, were nowhere to be found at this year's hearings, as Lewis called on both the Internal Revenue Service and the private sector to increase the number of individuals receiving EITC benefits.
During the 2007 tax season, "There will be many opportunities for reaching out to low-income families and workers to ensure that they are aware of the Earned Income Tax Credit when filing their tax returns," he said. "Congress will be working with the IRS and volunteer organizations to ensure that eligible workers claim these benefits."
A spokesman for one volunteer organization representing such Big Four firms as Ernst & Young, Deloitte & Touche and KPMG told the subcommittee that the members of her group are already working diligently to inform taxpayers of their right to EITC income subsidies.
That organization - Corporate Voices for Working Families - publishes an annual employer's guide to the EITC and other worker benefits, and conducts research to instruct employers on how to assist working families in accessing federal and company benefits more effectively, chief executive Donna Klein told the panel.
For their part, IRS representatives also assured the subcommittee that the agency is actively moving to provide EITC benefits to all eligible workers.
According to the IRS's Wage and Investment Division chief, Richard Morgante, the amounts at stake are not insignificant. For the 2006 tax year, a family with two children earning as much as $38,348 can qualify for a $4,536 lump-sum EITC tax credit, while smaller subsidies are available for single individuals or families with fewer than two children.
Morgante testified that the IRS is now actively educating the public about the availability of these tax credits. Specifically, he said, the tax service has begun referring EITC-eligible taxpayers to nearby Volunteer Income Tax Assistance and Tax Counseling for the Elderly sites for free return preparation services.
"In addition to approximately 12,000 volunteer sites, there are 401 IRS offices around the country that also provide free tax return preparation service for EITC-eligible taxpayers," he told lawmakers.
