Today, Congressman Bill Huizenga (MI-02) and 34 of his colleagues sent a letter to Principal Deputy Commissioner of the Internal Revenue Service Daniel Werfel requesting a review of the IRS' policies concerning the adoption tax credit. Given recent developments regarding the IRS' "targeting" of specific groups and findings from the 2012 Taxpayer Advocate Service's (TAS) annual report to Congress, significant questions regarding the IRS' handling of the adoption tax credit have been raised. The 2012 TAS Report found that 69% of individuals who claimed the adoption tax credit were audited by the IRS while only 1.5% of credits claimed were disallowed.
Additionally, the TAS and the Government Accountability Office (GAO) have both noted that the "adoption credit claims represent less than one-tenth of one percent of all individual returns for the 2011 filing season. By comparison, the IRS spent approximately 3.5% of its staff days on initial review and correspondence audit of adoption credit claims." In essence, the IRS spent over 35 times the amount of work hours investigating adoptive parents when compared to other tax filers.
"Parents that go through the adoption process should be commended for their actions not singled out by the federal government. To hear the IRS spent more than 35 times the amount of work hours scrutinizing adoptive parents than other tax filers raises serious questions about the integrity of the IRS' policies and without a doubt sends the wrong message to parents who have already adopted as well as prospective adoptive families," said Huizenga.
"Right now the federal government, especially the IRS, is suffering from a trust deficit. A full examination of the auditing practices of the IRS relative to the adoption child tax credit is warranted. Each and every child deserves a permanent, loving home. The federal government should be creating an environment that makes that goal possible by encouraging adoption, not subjecting families who participate in adoption to unwarranted and unjustified scrutiny."