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Adoptive Families also targeted by the IRS...69% Audit Rate


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http://www.nationalr...ts-david-french

As we get word that the IRS has harassed a number of pro-life groups, including at least one alleged demand that a pro-life group not picket Planned Parenthood, check out this statistic: In 2012, the IRS requested additional information from 90 percent of returns claiming the adoption tax credit and went on to actually audit 69 percent. More details from the Taxpayer Advocate Service:

During the 2012 filing season, 90 percent of returns claiming the refundable adoption credit were subject to additional review to determine if an examination was necessary. The most common reasons were income and a lack of documentation.

Sixty-nine percent of all adoption credit claims during the 2012 filing season were selected for audit.

■ Of the completed adoption tax credit audits, over 55 percent ended with no change in the tax owed or refund due in fiscal year 2012. The median refund amount involved in these audits is over $15,000 and the median adjusted gross income (AGI) of the taxpayers involved is about 64,000. The average adoption credit correspondence audit currently takes 126 days, causing a lengthy delay for taxpayers waiting for refunds.

While many returns had missing or incomplete information (more on that in a moment), what was the outcome of this massive audit campaign? Not much:

Despite Congress’ express intent to target the credit to low and middle income families, the IRS created income-based rules that were responsible for over one-third of all additional reviews in FY2012.

■ Of the $668.1 million in adoption credit claims in tax year (TY) 2011 as a result of adoption credit audits, the IRS only disallowed $11 million — or one and one-half percent — in adoption credit claims. However, the IRS has also had to pay out $2.1 million in interest in TY 2011 to taxpayers whose refunds were held past the 45-day period allowed by law.

So Congress implemented a tax credit to facilitate adoption – a process that is so extraordinarily expensive that it is out of reach for many middle-class families — and the IRS responded by implementing an audit campaign that delayed much-needed tax refunds to the very families that needed them the most. Oh, and the return on its investment in this harassment? Slightly more than 1 percent.

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Both articles point to the need that our tax code must be simplified to remove the investigation of taxpayers, whether due to an across-the-board inspection or one that is targeted.

Time, money and work is lost at trying to ferret out enemies of one another, conservative of progressives and progressive of conservatives. The IRS/federal gov't is a megaltithic intrusive institution that is turning on its citizens at the whim of those who seek advantage. A system of taxation that removes the need for verification/audit is a start, possibly the flat tax route.

The debate over ideology belongs in the Congress, not at the IRS.

Americans are turning on Americans. This has to stop !

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We are an adoptive family. We were requested to provide additional information. Another element of this that needs to be reported is that, state shield laws, though well intended, often make the additional information tough to come by without an enormous investment of time,money and effort. The GAO has long since recommended and the IRS accepted those recommendations to streamline the process. This has been in the works since the first adoption credits came into play and has been undergoing review and change since at least mid-year 2010. We need tax reform in general. If it took the recent "scandal" to make us aware of that, we are not paying attention.

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Encouraging others to do as your family has should be an easier goal to accomplish, without the threat of government audit and the heavy financial burden it demands, but our system of tax deductions/qualifications of a progressive income tax only stymie what is a great benefit to our society. A simplified tax structure should eliminate the majority of this intrusiveness and allow adoptive families to live in peace and just be families.

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I have no problem with anything you said, a more simplified tax code in general would allow us to focus on business growth instead of regulation, what is not to like? I will say this, this credit, though wonderful, is granted to people in all 50 states who have WIDELY varied adoption laws and informational screens and availabilities. Any family law practice can and will tell you the same thing. They have been involved neck deep. To complicate matters, try involving a child from a state other than your own. Gives you a whole new respect(uh no) for the system. As the Waidlaw blog stated, it had everything to do with adaptive knowledge and verification standards and though many were involved in audits, many have so many variables like private adoption, at that time foreign adoptions were omnipresent, so many elements, to pretend that a country that has the population we do, the various state laws and the hugely varied agencies involved isn't going to have an adaptive phase of implementation, is so simple as to not need to be involved.

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