117Steve Holt, The Earned Income Tax Credit at Age 30: What We Know6 (Brookings Institution 2006), . 118U.S. Government Accountability Office, Advance Earned Income Tax Credit: Low Use and Small Dollars PaidImpede IRS’s Efforts to Reduce High Noncompliance(GAO-07-1110, 2007). To be sure, some research suggests 45
the United States had serious administrative problems with those relatively few families that did use the advance payment mechanism.119In any event, in August of 2010, Congress repealed the advance payment mechanism.120Presumably, revenue considerations were at least as important as administrative considerations, as the repeal is projected to generate $1.1 billion in revenue over the next ten years.1213. Tax Return Preparation CostsAnother problem with tax credit regimes has to do with the complexity of the tax return process needed to claim refundable tax credits. In the United States, for example, almost everybody’s eyes glaze over at the mention of taxes, and more than half of all taxpayers pay someone to prepare their income tax returns, including around 70 percent of earned income tax credit recipients.122Earned income tax credit beneficiaries typically have to pay $100 or more tocommercial preparers in order to file returns to get their benefits.that most earned income tax credit beneficiaries would rather get a large annual refund than small increases in their weekly take-home pay. Jennifer L. Romich & Thomas S. Weisner, How Families View and Use the Earned Income Tax Credit: Advance Payment versus Lump Sum delivery, 53(4, Part 2) NATIONALTAXJOURNAL1245 (2000). Also of note, millions of low-income Americans are “unbanked”: they have no financial institution that could accept periodic payments. See, e.g., Tyler Desmond & Charles Spenger, Estimating the Cost of Being Unbanked, 18(2) COMMUNITIES& BANKING24 (Federal Reserve Bank of Boston, Spring 2007), ; Anne Kim, Taking the Poor Into Account: What Banks Can Do to Better Serve Low-Income Markets(Washington, DC: Progressive Policy Institute, Policy Report,July 2001), .119In that regard, the U.S. Government Accountability Office found that around 80 percent of earned income tax credit advance payment recipients failed to comply with at least one of the program’s requirements during the years 2002 through 2004. Almost 20 percent had an invalid Social Security number, and 40 percent failed to file the required tax return. U.S. Government Accountability Office, Advance Earned Income Tax Credit: Low Use and Small Dollars Paid Impede IRS’s Efforts to Reduce High Noncompliance, supranote Error: Reference source not found.120The Education Jobs and Medicaid Assistance Act of 2010, Public Law No. 111-226, § 219 (2010).