IRS facing possible implementation issues for monthly check – CBS Atlanta
(CBS Baltimore) – With the update to the Child Tax Credit, the Internal Revenue Service (IRS) will soon begin distributing millions of monthly checks to families. Recurring payments of up to $ 300 per child start July 15. Biden administration estimates that this kind of stimulus check for parents will reach 39 million households, representing about 90 percent of the country’s children. But with a program of this magnitude comes many operational challenges for an underfunded agency that was not created to distribute money on a monthly basis.
How does the updated child tax credit work?
For parents of children up to the age of five, the IRS will pay $ 3,600 per child, half of six monthly payments and half of a tax credit for 2021. This comes down to $ 300 per month and $ 1,800 at tax time. The amount increases to $ 3,000 in total for each child aged six to 17, or $ 250 per month and $ 1,500 at tax time. The IRS will make a one-time payment of $ 500 for dependents aged 18 or full-time students up to the age of 24.
READ MORE: Child tax credit: who will get a monthly check?
Payments will be based on the Modified Adjusted Gross Income (AGI) reflected on the 2020 income tax return of a parent or parents. (AGI is the sum of salaries, interest, dividends, alimony, retirement distributions, and other sources of income minus some deductions, such as student loan interest, child support payments, and pension contributions.) gradually at a rate of $ 50 per $ 1,000 of annual income over $ 75,000 for an individual and over $ 150,000 for a married couple. The benefit will be fully refundable, which means it will not depend on the recipient’s current tax burden. Eligible families will receive the full amount regardless of what they owe in taxes. There is no limit to the number of dependents that can be claimed.
Child Tax Credit payments will be automatically deposited on a monthly basis starting at July 15th. Each subsequent payment will be made on the 15th of the month until December 2021. If the 15th is a weekend or a holiday, the money will arrive on the nearest preceding business day. (August 15 falls on a Sunday, so that month’s distribution will arrive on August 13.) The remainder will be credited to the recipient’s 2021 taxes. Most eligible parents will not have to do anything to receive the money. It will just start to arrive based on the information the IRS already has on file.
❤️ The American Rescue Plan Act of 2021 extends the # Child tax credit for tax year 2021. Taxpayers can receive part of their credit in 2021 before filing their 2021 tax return. https://t.co/535gR8FJvp pic.twitter.com/lroi9iG1Yd
– IRSnews (@IRSnews) June 21, 2021
What issues surround the updated child tax credit?
The updated child tax credit was enacted in March, as part of the US bailout. The program was to start four months later. The buffer allowed the IRS to get past tax season. But it remains to be seen whether the agency has had sufficient time to implement this operationally complex program.
Sending child tax credit payments on a regular basis presents unique challenges. It’s about finding all the people who should be receiving the money, communicating to them that it is available and entitled to it, and then getting them into the system. A recent Data For Progress survey found that 53 percent of Americans know little or nothing about revised credit.
“If you’ve already filed your taxes in 2020 or 2019, or requested a stimulus check through the IRS website they put in place during the pandemic, then you don’t have anything else. to do, ”says Stephen Nuñez, senior guaranteed income researcher at the Jain Family Institute, an applied social science research organization. (Nuñez studies social assistance cash policy, which includes fieldwork to answer relevant policy questions about the social safety net.). You are covered and you should receive the benefit whether you expect it or not. However, if you’re not in the know – and unfortunately many of the most vulnerable households are the ones that don’t – they really have to come forward, if they haven’t already filed their taxes. “
It is estimated that a third or more of children living in poverty also live in households that do not file taxes. And these are the families likely to benefit the most from the extra money each month. The Biden administration has implemented a portal for non-declarants register. Its aim is to help the extremely poor and the homeless obtain their benefits.
READ MORE: Child tax credit: what does the updated credit mean for families?
– IRSnews (@IRSnews) June 22, 2021
Portal users encountered problems finding information or registering. According to Nuñez, “The new webpage has been criticized for being a bit clunky and difficult to use, and, in particular, it’s very difficult to navigate if you’re on a cell phone rather than a PC. So right now, voluntary tax aid sites, nonprofits and community development organizations, and community leaders are doing a lot of effort to educate and help these people get into the system. Because those big numbers on poverty we’re talking about – reducing poverty by 40 percent – assume everyone gets it. And if they don’t get it, we’re not going to see as much of an impact.
With public awareness of the delay in updating the Child Tax Credit, the Biden administration has sought to get the word out. June 21 was Child Tax Credit Awareness Day. And according to a White House fact sheet released before the day, “As part of Child Tax Credit Awareness Day, the administration will encourage elected officials, organizations that fight for children and organizations faith-based, to help low-income families – who may have incomes so low that they are not required to file taxes – to use a new, simple child tax credit enrollment tool to help give to their children a lifeline out of poverty.
Vice President Kamala Harris and other White House officials attended events on June 21 intended to educate the public. As the vice president told Event, “through tax credits, food and housing assistance, medical coverage and direct checks, the US bailout – and here’s the drum roll – the plan to American rescue will lift half of America’s children out of poverty. “
In addition to public awareness issues, the updated child tax credit faces technical hurdles. “Historically, the IRS has not been charged with sending tens of millions of checks per month,” notes Nuñez, “although they have had some experience of this over the past year due to the pandemic. So I think we’re all just waiting to see what happens. We’re talking about 40 million checks issued each month between July and December of this year. So there is always a possibility that there will be errors, that checks get lost in the mail, or that people inadvertently throw away a benefit that they don’t realize is coming.
The IRS, like many parents, did not have the money to do its job. Congress has continuously reduced the agency budget over the past decade; funding is down about 21 percent. This leaves the IRS short of what it needs to accomplish its various initiatives. A blog post A few months ago, national taxpayer lawyer Erin M. Collins cited limited resources and technological issues as the reasons for the delays in processing tax returns. But these shortcomings can also spill over into other initiatives, such as revised child tax credit controls.
An IRS watchdog has informed Congress that budget cuts limit the agency’s ability to keep pace with technology. The agency has long relied on an old programming language called COBOL. This is not necessarily a problem, unless the code is not kept up to date. And the IRS hasn’t kept it up to date. So when changes are made to the tax code, the agency has to find and pay programmers to fix things. The IRS has launched a modernization effort in 2019, but it depended on future funding. President Biden is also looking to increase the agency’s budget by $ 1.2 billion in fiscal 2022. However, none of this will help in the short term.
It remains to be seen how these technological limitations affect the rollout of the updated Child Tax Credit. But the challenges of implementation in the initial stages should not hurt a program that could change the lives of millions of people. And if the updated child tax credit is extended beyond 2021, those positive effects could have far-reaching effects for the country. According to Nuñez, “Research shows that as you reduce child poverty, these children grow up to be healthier, more productive and better educated adults. And, of course, it’s great for the economy, and it’s great for society.
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Originally published Tuesday, June 29, 2021 at 3:02 p.m. ET.