US tax agency targets poor

The taxpayers, whose average gross income was $13,300, were seeking the Earned Income Tax Credit (EITC). The credit potentially returns all the income and Social Security taxes withheld from paychecks. The average delayed refund was $3,519, which signifies that under the rules for obtaining the credit, the vast majority of those flagged as ‘tax cheats’ were single parents or married couples with children. The withheld amount represents a quarter of the annual income of the families.

“This is the biggest check of the year for these families. It creates a significant hardship when 25 percent of your income is held,” Julie Kruse, director for advocacy for the Center for Economic Progress in Chicago, told the Los Angeles Times. Initially enacted in 1975, the EITC was expanded during the Reagan administration in the late 1980s following the elimination of a vast array of social programs. After Medicaid, the EITC is the second largest program benefiting the poor.

Even in cases where the IRS paid out returns, recipients were forced to wait nearly a year due to the Bush administration’s crackdown on those applying for the EITC.

“The people most in need of tax fairness have been targeted for no other reason than that they are low income. There is absolutely no basis for withholding these refunds and to do so constitutes an extraordinary violation of fundamental taxpayer rights and fairness,” David Marzahl, executive director for the Center for Economic Progress, told CNSNews.com.

For five years, the Criminal Division within the IRS flagged tax returns filed by 1.6 million people as fraudulent. In the last year alone some 200,000 returns were branded as fake. Conversely, during the same period taxes were significantly reduced on households making over $200,000.

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http://www.wsws.org/articles/2006/feb2006/irs-f01.shtml