GAO Releases Report on the Adoption Tax Credit
In response to concerns about processing problems and delays related to the adoption tax credit, the General Accounting Office (GAO) studied how the credit was processed during the 2010 tax season. During the research phase, NACAC was able to share with the GAO information we had gathered from families about problems they encountered.
The report found that the IRS’s communication strategy was lacking and its compliance review process was very time consuming. The report found that 83 percent of the 100,000 claims filed were sent for additional review. Reviews found that only 17 percent of returns needed to be adjusted; the other 83 percent had no change in refund made or taxes owed. The review found no fraudulent claims and no cases were referred for criminal investigation.
The GAO suggests that the compliance reviews took more IRS staff time than warranted and unnecessarily slowed refunds (with each review taking an average of 74 days). GAO is recommending changes in the process for the 2011 adoption tax credit, including better communication up front.