THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Thursday, February 23, 1995 TAG: 9502220010
SECTION: FRONT PAGE: A10 EDITION: FINAL
TYPE: Editorial
LENGTH: Short : 31 lines
The purpose of the Earned Income Tax Credit is not to provide the people eligible for it a fast windfall.
The purpose of the EITC is also not to attract customers for tax preparers and banks, which then charge fees and interest for arranging or providing loans for which the EITC payment is collateral.
Those reminders seem necessary, given the burgeoning complaints that somehow the IRS is denying poor people their due by taking the time to verify EITC claims. On the contrary, the IRS is right to check. The working poor who have dependents, whether or not they earned enough to owe federal tax, may claim the Earned Income Tax Credit. The EITC payout for 1994 is estimated at $20 billion. According to a Treasury Department study, the cost of fraudulent and questionable EITC payments could amount to $5 billion a year. There are costs, too, in public support for a program riddled with fraud and in public compliance with tax laws generally.
For fear of going out of business, banks, of course, reject loans based on an EITC check that may or may not come through. Likewise, it isn't the IRS' business to stick taxpayers with a multibillion-dollar tab for collecting or writing off EITC payments that aren't due. by CNB