WASHINGTON, D.C. — In order to ensure eligible working families are able to claim and benefit from the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC), U.S. Sen. Sherrod Brown (D-OH) participated in a Finance Committee hearing which examined “Protecting Taxpayers from Incompetent and Unethical Return Preparers.” Brown, who is the author of legislation that would strengthen the EITC and CTC, offered the following statement:

“The EITC ensures that Americans who work hard and take responsibility can take home more of their pay each month,” Brown said. “But too many Americans aren’t claiming the EITC and CTC because of errors by tax preparers who aren’t regulated or tested for competence. In order to protect taxpayers, we must ensure that tax preparers are held to professional standards and held accountable if they commit tax fraud.”   

The EITC is a refundable tax credit that encourages work, helps families make ends meet, and leads to healthier, better educated children. In 2012, more than 27 million taxpayers received nearly $62 billion in EITC benefits. In 2011, according to the Internal Revenue Service (IRS), the EITC lifted 6.6 million Americans out of poverty, 3.1 million of whom were children—with the average EITC family claiming an average of $2,200.

Despite the success of the EITC, thousands of workers miss out when they do not file taxes. Further, EITC has been undermined by scurrilous allegations of fraud. However, fewer than 25 percent of EITC claims are filed by a preparer who has a professional credential—such as a CPA, attorney, or Enrolled Agent. Two-thirds of EITC claims are filed by paid preparers who have no requirement to demonstrate they understand income tax rules. This is despite the fact that tax filers rely on tax preparers to accurately file with the IRS, and filers are subject to serious penalties if their returns are inaccurate. Only four states, in fact, regulate tax preparers.

In March 2014, Brown released a new report showing that strengthening and enhancing the EITC, which Ronald Reagan called “the most effective anti-poverty program in the U.S.,” would impact 618,000 Ohioans; sixth most in the country. Brown is the author of the Working Families Tax Relief Act, legislation that would answer the call of the Administration and leading Republicans by making permanent enhancements to the EITC and expanding its eligibility to workers without children. By doing so, Brown’s bill would make 308,000 Ohioans eligible for the EITC and increase benefits for another 310,000. In fact, seven Ohio metropolitan areas rank in the national top 100 for the  number of workers who would be impacted: #24 Cincinnati, #26 Cleveland, #32 Columbus, #57 Dayton, #58 Toledo, #60 Akron, and #85 Youngstown.

Today’s hearing featured witness testimony from:

Panel One

  • John A. Koskinen, Commissioner, Internal Revenue Service, Washington, D.C.; and
  • Nina E. Olson, National Taxpayer Advocate, Internal Revenue Service, Washington, D.C.

Panel Two

  • James R. McTigue Jr., Director, Tax Issues, Government Accountability Office, Washington, D.C.;
  • Wayne A. McElrath, Director, Investigative Services, Government Accountability Office, Washington, D.C.;
  • William Cobb, President & CEO, H&R Block, Kansas City, Missouri;
  • Janis Salisbury, Chair, Oregon Board of Tax Practitioners, Oregon City, Oregon;
  • John Barrick, Associate Professor, Brigham Young University, Provo, Utah;
  • Chi Chi Wu, Staff Attorney, National Consumer Law Center, Boston, Massachusetts; and
  • Dan Alban, Attorney, Institute for Justice, Arlington, Virginia.

###