EIC Declined by IRS Letter

[Burke]

Daughter's return was held up due to EIC, & ACTC just like it is every year, but this year letter was received indicating refund was reduced due to "You, your spouse, or one or more of the dependents listed on your return didn't have an assigned taxpayer identification number by the due date of the tax return."  As far as I can tell it is only EIC which was disallowed.  CTC and ACTC is still there based on amount of reduction in refund (which was received last week,) as well as Saver's Credit (form 8880) and Child Care Credit (form 2441.) (Instructions say to "call #800 or write prior to 8/16/24......to review your account with a representative," and "....you must contact us by phone or in writing by August 16, 2024. We'll then reverse the change we made to your return.  You don't need to provide any explanation or additional documents when you request the reversal, [emphasis is mine] but we'll consider any information you provide us.

All (correct) SSN's are on all forms in the return for 1040, EIC, Form 8812 and Form 2441.    It would have rejected when I efiled if that were not the case.  Efile was accepted. Is this just a ploy to avoid EIC?

[Lion EA]

The IRS is broken!

[Lee B]

Something in their enhanced electronic screening process triggered this response, which requires a live IRS employee to review the return and take action.

Due to all the fraudulent credits being claimed, this is an unfortunate part of filing personal tax returns these days.

Their long range solution is to incorporate AI into their enhanced electronic screening process.

Gosh, I wonder if the AI will have hallucinations?

[Lee B]

TIGTA audits show that over 20% of all EITC claims are fraudulent.

There is a lot of Congressional pressure on the IRS to reduce fraudulent claims of tax credits which is why this kind of stuff happens, unfortunately.

[TexTaxToo]

18 minutes ago, Lee B said:

Their long range solution is to incorporate AI into their enhanced electronic screening process.

Really?  The TAS just warned against relying on AI for tax advice:

https://www.taxpayeradvocate.irs.gov/news/tax-tips/is-ai-generated-tax-advice-making-the-grade/2024/06/

Quote

A recent informal review by the Washington Post found that two of the leading tax preparation companies’ chatbots provided inaccurate or irrelevant responses up to 50 percent of the time when initially asked 16 complex tax questions. Both companies include disclaimers on their sites advising the assistants are still learning and users should verify the information provided.

 

[Lee B]

5 minutes ago, TexTaxToo said:

Really?  The TAS just warned against relying on AI for tax advice:

https://www.taxpayeradvocate.irs.gov/news/tax-tips/is-ai-generated-tax-advice-making-the-grade/2024/06/

 

According to the GAO:

"AI models are already being used to help select a representative sample of the taxpayer returns to audit. AI is also being used to identify returns that are more likely to have errors and are more likely to owe additional taxes. After these audits, as described above, IRS creates an estimate of the tax gap.Jun 6, 2024"

[BrewOne]

What does the 8867 look like?  Do you have all the documents listed on Line 5?

[Lee B]

https://www.gao.gov/blog/artificial-intelligence-may-help-irs-close-tax-gap#:~:text=AI models are already being,estimate of the tax gap.

[mcb39]

15 hours ago, Lion EA said:

The IRS is broken!

Totally!!!!

[Lee B]

I disagree. The IRS still has way too many old systems that don't work together.

They are currently scrambling trying to update all of these systems and get things under control.

There is no way to tell if they will be able to accomplish that, but they are trying.

Things could actually be much worse which would be a disaster of epic proportions.

[Burke]

15 hours ago, BrewOne said:

What does the 8867 look like?  Do you have all the documents listed on Line 5?

Yes.  Have reviewed every form involved on the return.

[kathyc2]

Are they all citizens?  There are different rules for some of the refundable credits bases on status.

[Lee B]

The return may have been flagged due to all the tax credits on the return which may be considered to be an indication of a fraudulent return?

[TexTaxToo]

On 6/26/2024 at 5:08 PM, Burke said:

Daughter's return was held up due to EIC, & ACTC just like it is every year, but this year letter was received indicating refund was reduced due to "You, your spouse, or one or more of the dependents listed on your return didn't have an assigned taxpayer identification number by the due date of the tax return." 

Was the return filed by the due date?  And was there perhaps a new child on the return (that wasn't there last year)? 

See this post: https://www.atxcommunity.com/topic/34903-filing-an-amended-return-for-refund-from-june-2021/?do=findComment&comment=212075

[Lloyd Hudson]

In this same thread.... I have a young minister and wife who have been clients since high school. This year the "refund" was reduced by the EITC without an explanation or a letter. The SSNs are carried forward and 8867  is fully curried. I have been waiting for an explanation but have not heard from anyone yet. I am more than willing to accept that the AI excuse is valid. High-interest target so knock them all into one basket and if they can call the  "roundup " a success.