Criminalizing the Earned Income Tax Credit


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David Cay Johnston has an important story in today's New York Times. Turns out, the IRS has been withholding refunds from a significant number of poor Americans for the last five years.

Tax refunds sought by 1.6 million poor Americans over the last five years were frozen and their returns labeled fraudulent, although the vast majority appear to have done nothing wrong, the Internal Revenue Service's taxpayer advocate told Congress yesterday. A computer program identified the refund
requests as suspect and automatically flagged the taxpayers for extra scrutiny for years to come, the advocate said in her annual report to Congress. These taxpayers were not told that the I.R.S. criminal investigation division suspected fraud.

The advocate, Nina Olson, said the I.R.S. devoted vastly
more resources to pursuing questionable refunds sought by the poor - which under the highest estimate is $9 billion - than to the $100 billion in taxes not paid each year by people who work for cash and either fail to file tax returns or understate their income.


As for the suspected fraud in refund requests, Ms. Olson said her staff sampled the suspect returns and found that 66 percent were entitled to the amount sought or more. Another 14 percent were due a partial refund. She expressed doubt that many among the remaining 20 percent had committed fraud.
....
"At a minimum, this procedure constitutes an extraordinary violation of fundamental taxpayer rights and fairness," Ms. Olson wrote, adding that it "may also constitute a violation of due process of law."



This is just another example of the fundamental disrespect for government that this Republican administration has. It also reflects their prority, through either legislation or abuse of power-as in this case, of offering major giveaways to the rich while cutting necessary public services for everyone else. In this case, it might amount to essentially stealing from those who can't afford a tax lawyer to watch their backs. This action by the IRS, and Senator Chuck Grassley's response, reflect a toxic assumption that poor people must be criminals. This is an example of lowered-expectation governance. A lot of people who need it the most seem like they've lost a whole lot of money here. Lets hope this gets straightened out, and fast.

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