Congressman Bill Archer (R-TX), Chairman of the Committee on Ways and Means, today announced that the Committee will hold a hearing to examine the Earned Income Tax Credit (EITC) Compliance Study released by the Internal Revenue Service (IRS) on April 21, 1997. The hearing will take place on Thursday, May 8, 1997, in the main Committee hearing room, 1100 Longworth House Office Building, beginning at 10:00 a.m.
Oral testimony at this hearing will be from invited witnesses only. Witnesses will include, among others, officials from the IRS, the Department of the Treasury, and the General Accounting Office. However, any individual or organization not scheduled for an oral appearance may submit a written statement for consideration by the Committee and for inclusion in the printed record of the hearing.
BACKGROUND:
Under present law, the amount of EITC that an eligible taxpayer may claim depends on whether the taxpayer has one, more than one, or no qualifying children and is determined by multiplying the credit rate by the taxpayer's earned income up to an earned income threshold. The maximum amount of the credit is the product of the credit rate and the earned income threshold. For taxpayers with earned income (or adjusted gross income (AGI), if greater) in excess of the phaseout threshold, the credit amount is reduced by the phaseout rate multiplied by the amount of earned income (or AGI, if greater) in excess of the phaseout threshold. For taxpayers with earned income (or AGI, if greater) in excess of the phaseout limit, no credit is allowed.
In recent years, Congress has enacted several changes to the credit's eligibility require-ments in order to better target the program to low-income workers. In addition, changes have been enacted to enhance the IRS's ability to enforce compliance with the credit, including a provision authorizing the IRS to treat a taxpayer's failure to provide a valid Social Security number for EITC qualifying children as a mathematical error.
Despite these changes, noncompliance in the EITC program remains at high levels. Last week, the IRS released a study entitled "Study of EITC Filers for Tax Year 1994." This study was based on a sample of 1994 returns claiming the EITC and received by the IRS between January 15 and April 21, 1995. The study found that taxpayers erroneously claimed approxi-mately $4.4 billion of EITC, which was 25.8 percent of the total EITC claimed in the 1995 filing season. Adjusting for changes in IRS enforcement practices made for the 1995 filing season, the net error rate would have been 23.5 percent. The study also found that had the procedural changes enacted in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (P.L. 104-193) been in effect during the 1995 filing season, the error rate would have been 20.7 percent.
In announcing the hearing, Chairman Archer stated: "The results of the IRS's EITC -compliance study are extremely troubling. Despite the Government's best efforts, EITC fraud and errors are still shockingly high. We have an obligation to the nation's taxpayers to ask whether the benefits of delivering the EITC through the tax system justifies the loss of $5 billion a year in fraudulent and erroneous payments."
FOCUS OF THE HEARING:
The Committee will receive testimony from Ted F. Brown, Assistant Commissioner of the IRS, Criminal Investigation, regarding the findings of the EITC Compliance Study and the types of fraudulent claims and errors identified by the IRS. The Committee will also hear Treasury officials regarding legislative options recently advanced by the Department for improving EITC compliance, and from the General Accounting Office regarding work they have done on EITC administration and compliance issues.
DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:
Any person or organization wishing to submit a written statement for the printed record of the hearing should submit at least six (6) copies of their statement and a 3.5-inch diskette in WordPerfect or ASCII format, with their address and date of hearing noted, by the close of business, Thursday, May 15, 1997, to A.L. Singleton, Chief of Staff, Committee on Ways and Means, U.S. House of Representatives, 1102 Longworth House Office Building, Washington, D.C. 20515. If those filing written statements wish to have their statements distributed to the press and interested public at the hearing, they may deliver 200 additional copies for this purpose to the Committee office, room 1102 Longworth House Office Building, at least one hour before the hearing begins.
FORMATTING REQUIREMENTS:
Each statement presented for printing to the Committee by a witness, any written statement or exhibit submitted for the printed record or any written comments in response to a request for written comments must conform to the guidelines listed below. Any statement or exhibit not in compliance with these guidelines will not be printed, but will be maintained in the Committee files for review and use by the Committee.
1. All statements and any accompanying exhibits for printing must be typed in single space on legal-size paper and may not exceed a total of 10 pages including attachments. At the same time written statements are submitted to the Committee, witnesses are now requested to submit their statements on a 3.5-inch diskette in WordPerfect or ASCII format.
2. Copies of whole documents submitted as exhibit material will not be accepted for printing. Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material not meeting these specifications will be maintained in the Committee files for review and use by the Committee.
3. A witness appearing at a public hearing, or submitting a statement for the record of a public hearing, or submitting written comments in response to a published request for comments by the Committee, must include on his statement or submission a list of all clients, persons, or organizations on whose behalf the witness appears.
4. A supplemental sheet must accompany each statement listing the name, full address, a telephone number where the witness or the designated representative may be reached and a topical outline or summary of the comments and recommendations in the full statement. This supplemental sheet will not be included in the printed record.
The above restrictions and limitations apply only to material being submitted for printing. Statements and exhibits or supplementary material submitted solely for distribution to the Members, the press and the public during the course of a public hearing may be submitted in other forms.
The
Committee seeks to make its facilities accessible to persons with
disabilities. If you are in need of special accommodations, please
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event
(four business days notice is requested). Questions with regard to
special accommodation needs in general (including availability of
Committee materials in alternative formats) may be directed to the
Committee as noted above.