The Commercial Appeal

IRS: New child payments on the way

- Marcy Gordon

WASHINGTON – It’s a strain, but the head of the IRS said Tuesday he expects to meet the July 1 deadline in the new pandemic relief law for starting a groundbrea­king tax program aimed at reducing child poverty. That means new advance monthly payments of as much as $300 per child could begin flowing to lower-income families this summer.

In testimony at a Senate hearing, IRS Commission­er Charles Rettig said it will cost nearly $400 million and require the hiring of 300 to 500 people to get the new monthly payment system and electronic portal in place for the child tax credit. “The IRS will be working hard to deliver this program quickly and efficiently,” he said.

“We have to create a new structure,” Rettig said, adding that the tax-collecting IRS is “not historical­ly” a benefits agency. The IRS, which has suffered budget cuts over the past decade, has been further burdened by the pandemic and the task of sending out hundreds of millions of economic stimulus payments in three rounds.

In embedding the expanded child tax credit in the $1.9 trillion rescue legislatio­n enacted last month, Democrats sought to provide support to families affected by the coronaviru­s pandemic and parents forced to cut down on work or give up jobs to take care of children after losing access to child care. Democrats view the tax change as an opportunit­y to address income inequality worsened by the pandemic. According to some academic estimates, it would reduce the number of children living in poverty in the U.S. by more than half.

It temporaril­y increases the existing child tax credit from a maximum $2,000 a year per child to $3,000 for each child ages 6 to 17 and $3,600 for children under 6. It offers the option for families to receive advance monthly payments, rather than waiting for a lump sum based on the parents’ tax liability. The change will be in effect for a year under the rescue law; Democratic lawmakers have said they want to make it permanent.

That has sparked criticism by Republican­s, who have criticized the initiative as an expansion of the welfare state that removes the incentive for parents to seek work. They are expressing concern about fraud in the program and asking what the IRS will do to crack down on improper payments.

The new child tax credit “is not targeted to pandemic relief, and risks the loss of billions of taxpayer dollars in fraudulent and improper payments,” Rep. Kevin Brady of Texas, the senior Republican on the House Ways and Means Committee, wrote in letters to Biden administra­tion officials.

At Tuesday’s hearing, Sen. Charles Grassley, R-iowa, said he was concerned that the new tax benefit will remake the IRS’ role into a “social welfareori­ented” agency.

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