Fearing filing season chaos, IRS hits pause on web tool for Child Tax Credit

The decision has disappointed some advocates for low-income people, who fear it will mean some will face long waits for assistance or miss out on the payments altogether.



The White House has put on ice an online tool it had widely promoted as a way for people at the bottom of the income ladder to collect Democrats’ signature Child Tax Credit payments.

The administration has reluctantly concluded that it cannot allow them to use the portal to claim billions in child payments now being distributed by the IRS because it will cause too many problems with tax-filing season.

The widget was designed to give people who aren’t required to file annual tax returns, because they make too little money, a simple way to register with the agency for the money without being forced to complete a full return — something that might be intimidating for those who rarely interact with the tax system.

But the administration feared the wrong people — namely, those who are required to file returns — would use the non-filer portal, creating chaos at the IRS when it is already struggling to process tens of millions of returns, including ones left over from the last year.

Instead, the administration says it will reopen the portal after the filing season ends on April 18, a top official said.

In the meantime, it is encouraging low earners to fill out a traditional tax return, both so they don’t have to wait for their money and because they can also qualify for other tax benefits in addition to the child credit.

“We are still deeply committed to ensuring low-income Americans can get their Child Tax Credit,” said Gene Sperling, a senior adviser to President Joe Biden.

Gene Sperling speaks during a Child Tax Credit/Earned Income Tax Credit Day of Action event.

White House senior adviser Gene Sperling speaks during a Child Tax Credit/Earned Income Tax Credit Day of Action event at the South Court Auditorium at Eisenhower Executive Office Building on Feb. 8. | Alex Wong/Getty Images

The decision has disappointed some advocates for low-income people, who fear it will mean some will face long waits for assistance or miss out on the payments altogether.

“It’s going to be confusing for people” said David Newville, a senior program director at Code for America, which developed the non-filer portal promoted by the administration.

“If they used the tool, they’re going to want to use it again.”

Some won’t bother trying to fill out an entire return, he predicts.

“The full return has lots of challenges for non-filers who have a hard time navigating the process,” said Newville. “It is a really high bar for some folks.”

The administration’s decision is a setback for Democrats’ campaign to use the child credit to raise living standards and comes as the IRS distributes billions in credits.

Though Democrats’ expansion of the break expired at the end of 2021, there is still money being doled out — at most, people received only half of the payments in the form of monthly checks last year. They can collect the remainder this year when they do their taxes.

Credits will be even larger for the millions who opted out of the monthly payments or otherwise did not receive them last year. They’re worth up to $3,600 per child.

At issue is a key way in which the administration was trying to get that money to people beyond the IRS’ reach. Generally, people who earn less than the standard deduction — about $25,000 for couples — are excused from having to file returns.

Yet they were among the biggest beneficiaries of Democrats’ expansion of the credit, getting by far the largest percentage increase in aid.

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Working with Intuit, the IRS offered an online portal that allowed non-filers to fill out what was essentially a simplified 1040 tax form where they could report a few basic things like their family composition.

While that was easier than competing a traditional return, the tool was still criticized as being difficult to use, because it wasn’t mobile-phone friendly and wasn’t initially available in Spanish.

The White House later turned to a more user-friendly app developed by Code for America, urging the public to use it instead of the IRS’ portal. In a little more than two months, it was used by 114,000 households, Code for America says.

But there was a problem brewing behind the scenes: A lot of people who were required to file were mistakenly using the non-filer portal.

That was a manageable issue when it happened last fall.

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But the administration worried that if something similar happens during filing season, which began Jan. 24, it would sow confusion among the public and the IRS alike, a top official said.

If people used the non-filer portal to try to claim the rest of the money and then later filed a full return, for example, they would be flagged by the agency for filing two returns, something that is not allowed. (People wanting to make changes to a return are required to file amended returns.)

“Last year, since the filing season had already ended, those mistakes were kind of no harm, no foul,” said Sperling. “But if that happened at the beginning of the filing season this year, these families would get through the Child Tax Credit portal and then when they try to do their normal tax filings, they would look like they were trying to file their taxes twice.”

“That could lock them out of any benefits for months while the IRS tries to sort out their situation.”

A paper W-4 tax form is pictured.

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For now, the administration says it is focusing on getting low-income people to fill out traditional tax returns, noting many of them will also qualify for other breaks like the Earned Income Tax Credit and a separate and beefed-up break for child care expenses — which could means thousands of dollars more in assistance, beyond the child credit.

And there is a network of organizations that help low-income people file returns, including through the VITA or Volunteer Income Tax Assistance program and another initiative called Tax Counseling for the Elderly — though some lamented not being able to direct clients to Code for America’s portal.

“It’s not ideal,” said Alejandro Valenzuela Jr., director of tax and financial services at Prepare + Prosper, which provides free tax prep services to low-income people in Minnesota. “I wish it was still available now. It would have been nice to have it available to these families.”

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