WASHINGTON – It’s a strain, but the head of the IRS said Tuesday he expects to meet the July 1 deadline in the new pandemic relief law for starting a groundbreaking tax program aimed at reducing child poverty. That means new advance monthly payments of as much as $300 per child could begin flowing to lower-income families this summer.
In testimony at a Senate hearing, IRS Commissioner Charles Rettig said it will cost nearly $400 million and require the hiring of 300 to 500 people to get the new monthly payment system and electronic portal in place for the child tax credit. “The IRS will be working hard to deliver this program quickly and efficiently,” he said.
“We have to create a new structure,” Rettig said, adding that the tax-collecting IRS is “not historically” a benefits agency. The IRS, which has suffered budget cuts over the past decade, has been further burdened by the pandemic and the task of sending out hundreds of millions of economic stimulus payments in three rounds.
In embedding the expanded child tax credit in the $1.9 trillion rescue legislation enacted last month, Democrats sought to provide support to families affected by the coronavirus pandemic and parents forced to cut down on work or give up jobs to take care of children after losing access to child care. Democrats view the tax change as an opportunity to address income inequality worsened by the pandemic. According to some academic estimates, it would reduce the number of children living in poverty in the U.S. by more than half.
It temporarily increases the existing child tax credit from a maximum $2,000 a year per child to $3,000 for each child aged 6 to 17 and $3,600 for children under 6. It offers the option for families to receive advance monthly payments, rather than waiting for a lump sum based on the parents’ tax liability. The change will be in effect for a year under the rescue law; Democratic lawmakers have said they want to make it permanent.