RECOMMENDATION 01123-001
RECOMMENDATION TEXT:
Establish a safe harbor for families residing outside the U.S. that incorrectly received the 2021 Advanced Child Tax Credit and make clear how to apply for the safe harbor by publishing information on the IRS website. Creating a safe harbor for those families residing outside the U.S. in 2021 and incorrectly received the Advanced Child Tax Credit will help the families unable to pay back the funds. Adding clear guidance on the website will help both taxpayers and tax practitioners understand the eligibility criteria and how to claim it. This will create a reference for anyone to go back to in the future as well. Response explanation The safe harbor limiting repayments of the 2021 advance child tax credit was created by the American Rescue Plan. It provides repayment protection of up to $2,000 per child used to calculate the advance payments but not claimed on the tax return. Existing guidance such as at Topic C of the Q&A at https://www.irs.gov/pub/taxpros/fs-2022-06.pdf applies equally to all taxpayers, including families residing outside the United States in 2021. The law does not allow any additional safe harbors. None can be created administratively.
IRS Action: Not adopted
The safe harbor limiting repayments of the 2021 advance child tax credit was created by the American Rescue Plan. It provides repayment protection of up to $2,000 per child used to calculate the advance payments but not claimed on the tax return. Existing guidance such as at Topic C of the Q&A at https://www.irs.gov/pub/taxpros/fs-2022-06.pdf applies equally to all taxpayers, including families residing outside the United States in 2021. The law does not allow any additional safe harbors. None can be created administratively.
RECOMMENDATION 01123-002
RECOMMENDATION TEXT:
Release an IRS newswire notices to announce safe harbor eligibility and how to claim it for international taxpayers for the 2021 advanced child tax credit. Notifying the IRS newswire mailing list will help raise awareness that this is a problem and there is a solution. Response explanation To reiterate the response to recommendation #1, the repayment protection safe harbor provisions under the American Rescue Plan are equally applicable to all taxpayers, regardless of residency status, and are outlined in Topic C of the Q&A at https://www.irs.gov/pub/taxpros/fs-2022-06.pdf. Since the safe harbor limitations are clearly defined in current guidance and no additional safe harbor provisions can be established administratively, the IRS will not issue a separate newswire notice targeting international taxpayers. Impacted taxpayers are encouraged to review existing Q&A for instructions to determine and claim applicable safe harbor repayment protections.
IRS Action: Not adopted
To reiterate the response to recommendation #1, the repayment protection safe harbor provisions under the American Rescue Plan are equally applicable to all taxpayers, regardless of residency status, and are outlined in Topic C of the Q&A at https://www.irs.gov/pub/taxpros/fs-2022-06.pdf. Since the safe harbor limitations are clearly defined in current guidance and no additional safe harbor provisions can be established administratively, the IRS will not issue a separate newswire notice targeting international taxpayers. Impacted taxpayers are encouraged to review existing Q&A for instructions to determine and claim applicable safe harbor repayment protections.
RECOMMENDATION 01123-003
RECOMMENDATION TEXT:
Send a notice to taxpayers who are eligible for safe harbor and how the taxpayer should apply for it. The IRS will know who wasn’t eligible and who has been asked to pay it back or is in debt to the IRS to pay it back. The IRS can send out a notice to those taxpayers to tell them that the safe harbor is available to them if they apply. To reiterate the response to recommendation #2, the repayment protection safe harbor provisions under the American Rescue Plan are equally applicable to all taxpayers, regardless of residency status, and are outlined in Topic C of the Q&A at https://www.irs.gov/pub/taxpros/fs-2022-06.pdf. Additionally, Letter 6419 was issued to taxpayers who received advance Child Tax Credit payments and has a section dedicated to the repayment protection provisions. Given the safe harbor provisions are defined by law and apply uniformly to all taxpayers and notices have already been issued to the taxpayers, the IRS will not issue additional taxpayer-specific notices regarding eligibility or application instructions.
IRS Action: Not adopted
To reiterate the response to recommendation #2, the repayment protection safe harbor provisions under the American Rescue Plan are equally applicable to all taxpayers, regardless of residency status, and are outlined in Topic C of the Q&A at https://www.irs.gov/pub/taxpros/fs-2022-06.pdf. Additionally, Letter 6419 was issued to taxpayers who received advance Child Tax Credit payments and has a section dedicated to the repayment protection provisions. Given the safe harbor provisions are defined by law and apply uniformly to all taxpayers and notices have already been issued to the taxpayers, the IRS will not issue additional taxpayer-specific notices regarding eligibility or application instructions.