Grassley: Rushed Stimulus Package Leaves Taxpayers Facing Problems With Making Work Pay...

Grassley: Rushed Stimulus Package Leaves Taxpayers Facing Problems With Making Work Pay Tax Credit

M E M O R A N D U M

To: Reporters and Editors
Fr: Jill Gerber for Sen. Grassley, 202/224-6522
Re: Report on Making Work Pay Credit
Da: Monday, Nov. 16, 2009

November 16, 2009 – (RealEstateRama) — Sen. Chuck Grassley, ranking member of the Committee on Finance, today made the following comment on a new report saying that a $400 tax credit provided by the economic stimulus plan may leave more than 15.4 million Americans owing money to the IRS because of under-withholding from their paychecks. The Treasury Inspector General for Tax Administration (TIGTA) today released its review of the IRS’ administration of the making work pay credit. Recent reports have documented administrative problems with the homebuyer tax credit and the existing health care tax credit.

“This is another unfortunate example of what can happen when Congress and the White House rush through legislation like the stimulus without thinking through the consequences. People will get help this year and have it taken away next year and might even pay penalties. It amounts to a bait and switch for these taxpayers, and that’s not the way tax policy ought to treat people. This is also an example of how challenging it is to implement new tax laws. Various health reform bills require the IRS to keep track of who qualifies for subsidies to buy insurance. These are many of the same individuals who may be subject to the whipsaw from the making work pay credit. It’s hard to see how the IRS could take on dozens of new responsibilities under health reform when one tax credit causes so many problems.”

Today’s report is available at http://www.treas.gov/tigta/auditreports/2010reports/201041002fr.pdf

Earlier this month, Grassley sought assurances that the IRS would be prepared for its significant new responsibilities under health care reform. The details of that inquiry follow here.

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