Although we have not confirmed this with the IRS, Creating a Family is hearing that the IRS is sending the majority of returns claiming the adoption tax credit to the correspondence auditors to be reviewed. At that point, they determine which returns will be processed and which will be audited. Last year, according to the Government Accountability Office, 68% of the nearly 100,000 returns claiming adoption tax credits were audited. We have no way to tell what percentage is being audited this year, but given what we are currently hearing, I would say it is running about the same as last year.
This year, as happened last year, it appears that the documentation that was originally mailed with your return is not automatically being sent with the return to the correspondence auditor’s office. Thus, most people are being asked to resubmit their documentation after their return reaches the auditor’s desk. When this happens, it is tempting to assume that the documents you originally sent were insufficient. Given what we are now hearing, this may very well not be the case. Unless requested otherwise, resend an exact copy of the documents originally submitted.
It is important to send them exactly the documents they are requesting (see this table to determine what documents are required) and include proof of payment of the expenses you are claiming for your credit. Organize all the documents as suggested in Creating a Family’s Top Ten Tips for Avoiding Delays When Filing for the Adoption Tax Credit.
The IRS said it should take three weeks for taxpayers to receive a refund if a complete and accurate paper return is submitted and correct documentation is attached. However, very few people are reporting such quick processing. If you are being audited, you should plan on up to 14 weeks to receive your refund, although most people are receiving the non-adoption credit part of their refund much sooner.
Taxpayer Advocacy Service for Help with the Adoption Tax Credit Delay
If you have not heard from the IRS or the wait becomes excessive, you can contact the Taxpayer Advocate Service (TAS), which is an independent service within the IRS. Their motto “we’re your voice at the IRS”. The TAS services are fee, but supposedly only available where significant financial hardship is being caused by the delay. There seems to be some leeway as to what constitutes a financial hardship. If rejected, try calling again and speaking with a different advocate.
There is at least one local taxpayer advocate office in every state, the District of Columbia, and Puerto Rico. To find the number for the office in your state call 1-877-777-4778 or look it up at the bottom of IRS You can call your local advocate, whose number is in your phone book and in Pub. 1546. You can also ask at the TAS Facebook or Twitter account.
Other Resources to Help with the Adoption Tax Credit
For more information and resources to help answer your questions about the adoption tax credit, check out the following:
- Creating a Family radio shows:
- Feb 29, 2012: The Refundable Adoption Tax Credit for 2011 and 2012 Taxes
- Dec 14, 2011: Adoption Tax Credit for 2011 and 2012
- Dec 1, 2010: Adoption Tax Credit 2010
- Other Creating a Family Resources
- Adoption Tax Credit FAQ Page
- Creating a Family blog on Adoption Tax Credit: Look Back at 2011, Look Forward to 2012
- Creating a Family blog on The Future of the Adoption Tax Credit in 2011, 2012, 2013, & Beyond
- Creating a Family blog on The Passing of the New and Improved Adoption Tax Credit
- Creating a Family blog on Delays in Receiving the Adoption Tax Credit – What You Can Do
- Creating a Family blog on the Adoption Tax Credit Blog Update
- Creating a Family blog on Comparisons between the adoption tax credit and welfare
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