What does it really take for a family to “get by”? Gallup has been asking Americans that question for nearly 80 years. Their most recent survey shows that Americans believe that a family of four needs nearly $60,000 a year to make ends meet in their community. Almost forty percent of respondents picked an income between $50,000 and $75,000; another 22 percent picked between $30,000 and $50,000 while 18 percent picked over $75,000 and 13 percent had no idea. Only 7 percent thought a family could get by with less than $30,000 in income. (By comparison, the official federal poverty level for a family of four is considerably lower—under $24,000.)

So it’s not surprising that one of the most persuasive arguments for the EITC is that it helps working families meet basic needs. For tax year 2012, a family of four, headed by a married couple, can only claim the maximum EITC if their income is under $22,300 and by the time their income reaches $47,162 they can’t claim the credit at all.

If you explain that to claim the full credit a family of four must make less than $22,300 a year, most Americans will understand that simply isn’t enough income to make ends meet.

What does that tell us as advocates? Two things. First, it’s important to explain in dollars what a family must earn to claim the full credit. Second, it confirms what other survey research has shown—that people understand that an EITC helps a working family with this level of income meet basic needs.

• The Iowa House and Senate agreed this week upon a tax plan that would double the state’s Earned Income Tax Credit (EITC) from 7% to 14% of the federal credit in tax year 2013, and increase the credit to 15% in 2014. The bill, which the governor has indicated he will sign, also includes more than $10 of tax cuts for business, draining state revenues, for every dollar of EITC increase.  In the last two years, the legislature passed an EITC three times only to see the governor veto it each time; the hard work and persistence of Iowa advocates finally paid off and helped make this bill better than it might otherwise have been. (The Quad City Times, The Des Moines Register)

• Last week, the Missouri House passed a bill that had already been passed by the Senate to end the renters’ portion of the state’s “Circuit Breaker” Property Tax Credit. This Tuesday, however, Gov. Nixon vetoed the bill, contending that it “does not constitute comprehensive tax credit reform,” so the credit for renters will be preserved. (The St. Louis Beacon)

• New York Mayor Bloomberg this week announced a pilot program to expand the city’s EITC for low-income single workers without dependent children, with the goal of increasing employment and earnings. (CPA Practice Advisor, Center for Economic Opportunity)

• Maryland‘s Montgomery County Executive Isaiah Leggett is asking the County Council to trim its proposed additions to the fiscal 2014 budget, which could jeopardize a proposal to restore the county’s Working Families Income Supplement to match the full amount that a resident receives from the state’s EITC. (The Washington Post)

• North Carolina House Republicans offered their own tax overhaul plan Thursday that would lower the personal income tax rate to a flat 5.9 percent beginning with 2014 returns and increase the state’s Child Tax Credit of $100 per child to $250 for most filers, but drop to $125 for the highest wage earners. Neither the House nor Senate tax reform plans include extending the EITC past 2013. (ABC 11)

• David Knezek, a former Marine now representing Michigan’s 11th District in the state House of Representatives, argued for the restoration of the state’s EITC to direct support back to the nearly 10,000 active duty military families and many more veteran families in the state who were negatively impacted by Gov. Rick Snyder and the Legislature’s 2011 decision to cut the credit from 20% to 6% of the federal EITC. In addition, after the state revenues estimation came in significantly higher than expected, the Michigan League for Public Policy and many of its partners called for using a portion of the new revenues to restore the EITC to 10% of the credit.  (Detroit Free Press, Michigan League for Public Policy )

• Jody Harris of the Maine Center for Economic Policy disputed Gov. LePage’s assertion that Maine’s income tax is regressive, instead arguing that the state’s property taxes are regressive and the governor’s proposal to eliminate the state’s Residents Property Tax and Rent “Circuit Breaker” Refund Program will only make them even more so. (Maine Center for Economic Policy)

• A letter to the editor in the Wisconsin State Journal called on Gov. Scott Walker to use some of the state’s surplus to restore tax cuts for low-income residents, which would include reversing the 2011 reduction to the state’s EITC. (The Wisconsin State Journal)

• The Washington Post showed how the number of U.S. households estimated to live below the “extreme poverty” line, meaning living off of less than $2 a day per person, is lowered considerably when safety net programs such as the EITC and Child Tax Credit are taken into account. (The Washington Post)

• New York Times columnist Ross Douthat made the case that there are other ways to promote health security than through insurance – such as expanding the federal Child Tax Credit to support struggling families. (TwinCities.com)

• An op-ed to the Bangor Daily News highlighted the effectiveness of the federal EITC and Child Tax Credit for supporting working mothers in Maine, contending that as lawmakers debate reforming our nation’s tax code, it’s important these successful efforts remain intact. (The Bangor Daily News)

• The Colorado legislature passed a bill to enact a permanent state Earned Income Tax Credit (EITC) at 10 percent of the federal credit and a Child Tax Credit based on a percentage of income this week and now it only awaits approval from Gov. Hickenlooper, who is expected to sign the bill into law. The Colorado law has a provision that other states may wish to consider: the EITC is not to be counted as income when deciding if someone is eligible for public assistance, medical assistance, or any other publicly funded benefit.  (The Coloradoan)

• Vermont Gov. Shumlin and legislative leaders this week agreed on a budget deal for 2014 that does not include any additional tax increases and will leave the state’s EITC untouched. The governor had originally proposed cutting the credit by $17 million to fund child care subsidies. (Seven Days, VTDigger.org, Bloomberg Businessweek)

• The Minnesota Senate Omnibus tax bill includes $18 million in improvements to the state’s property tax circuit breaker, called the Property Tax Refund for Renters, which was seriously eroded by cuts passed in 2011. (Minnesota Budget Bites)

• A joint committee of Oregon lawmakers is set to begin reviewing a number of different tax credits, including the state’s EITC, which Gov.  Kitzhaber has proposed expanding from 6 percent to 8 percent of the federal credit. That proposal is supported by both progressive and conservative organizations. (The Statesman Journal)

• Several NAACP members and other activists were arrested in North Carolina Monday after protesting decisions by the General Assembly, including their decision to reduce the state’s EITC from 5 percent to 4.5 percent of the federal credit for tax year 2013, and eliminate the credit completely beginning in 2014. (FOX 8, ABC 11)

• A Kansas City Star op-ed this week highlighted the importance of Missouri‘s property tax circuit breaker for renters, called the Property Tax Credit, and Kansas‘ EITC, both of which are at risk of being reduced or eliminated this year. These credits can help make the difference between falling short on bill payments and making ends meet for lower-income families. (The Kansas City Star)

• A New Jersey Spotlight analysis showed how net property taxes in New Jersey rose 18.6 percent during Gov. Chris Christie’s first three years in office, compared to just 6 percent in Democratic Gov. Jon Corzine’s last three years in office. While Corzine doubled average property tax rebates and provided rebates to families earning up to $250,000, Christie sharply cut the size of rebate payments and limited eligibility for non-seniors to those earning $75,000 or less. (NJ Spotlight)

• The Washington Post editorial board came out in favor of enacting a carbon tax, contending that Democrats should push for some of the revenue to be used to enhance programs such as the EITC to ensure the carbon tax doesn’t sting consumers, particularly those least able to afford it. (The Washington Post)

• Dan Glickman, former U.S. secretary of agriculture and member of Congress, argued that the issue of poverty has become an almost invisible issue for policymakers, even though the U.S. poverty rate is approaching a 50-year high. Glickman suggested that improving work supports such as the EITC and Child Tax Credit is a possible solution to the poverty problem in our nation. (The Wichita Eagle)

• The Vermont Senate approved a tax bill Wednesday that doesn’t include the $12 million cut to the state’s Earned Income Tax Credit (EITC) being pushed by Gov. Shumlin, and instead reduces some exemptions for high-income earners. The House and Senate will have to come to an agreement soon for the passage of any tax package before the state’s legislative session ends on May 11; since the House also refused to reduce the EITC, the credit should not be part of any negotiations, but Gov. Shumlin may continue to press for it. (Burlington Free Press, Vermont Today)

• A bill to enact a permanent state EITC and Child Tax Credit in Colorado passed with amendments in the House State Affairs Committee Monday and now moves on to the House Finance Committee. The EITC credit was amended so that the credit could only be claimed if the state revenues exceed the amount in its Taxpayers Bill of Rights, (not expected until 2015 at the earliest) and the Child Tax Credit was amended so that it can only be claimed if both a federal law and a Colorado law are enacted that allow the state to collect taxes from online retailers. The Senate has already passed the bill without these conditions. (The Denver Post 1,2)

• Nan Madden from the Minnesota Budget Project noted that the Minnesota House omnibus tax bill passed last week makes the tax system fairer, in part because it would increase the state’s Property Tax Refund for homeowners by $157 million and for renters by $15.5 million in 2015. The bill would also update Minnesota’s EITC, called the Working Family Credit, to reflect recent federal changes affecting married couples. (Minnesota Budget Project)

• Zach Schiller, research director at Policy Matters Ohio, testified to the House Ways & Means Committee on tax reform this week, commenting that the creation of a state EITC would benefit 800,000 working families in Ohio and make the state’s tax system fairer. (Policy Matters Ohio)

• The Michigan League for Public Policy highlighted the story of Paula Fekken, a low-income working mother of four who is feeling the sticker shock from tax changes made in Michigan in 2011, when the Legislature and Gov. Rick Snyder reduced the state EITC from 20 percent to 6 percent of the federal credit. The change means she won’t be able to repair her aging car that she needs for work. (Michigan League for Public Policy)

• Democratic Senators Dick Durbin and Sherrod Brown recently introduced legislation to make permanent the 2009 improvements to the Earned Income Tax Credit (EITC) and the Child Tax Credit, and expand eligibility for both credits. The bill would make the EITC more accessible to families without children, and reduce the age a taxpayer becomes eligible to 21. Senator Max Baucus, who chairs the Senate Finance committee, has signed on to the bill, which may indicate how he will treat these credits in any tax reform bill the committee develops. The bill is supported by over 300 national organizations. (The Hill, Office of Senator Brian Schatz)

• First Focus highlighted recent articles and research showing how the EITC can mean the difference between scraping by and falling short for millions of American families, and how it helps  keep millions of American children out of poverty. (First Focus)

• Vermont Gov. Shumlin’s administration cut back its child care initiative this week to require $12 million in new funds instead of $17 million, but the plan would still reduce the state’s Earned Income Tax Credit (EITC). The Senate Health and Welfare Committee has recommended leaving the EITC intact. And advocates for the credit are speaking out, arguing that if the money to fund child care subsidies must come from a state program, the EITC should not be it. (The Burlington Free Press, Public Assets Institute, VTDigger.org)

• Mike Tramontina, President of ISED Ventures, which coordinates Iowa’s volunteer tax assistance programs, and Jackie Lynn Coleman, Executive Director at the National Community Tax Coalition wrote to The Gazette in support of an Iowa Senate-approved bill to increase the state’s EITC from 7 to 20 percent of the federal credit. The House and Gov. Branstad must now approve the bill. (The Gazette)

• Wade Gibson of Connecticut Voices for Children argued that while Connecticut‘s income taxes are somewhat progressive, the regressive sales and property taxes hit the middle class and poor harder than the wealthy. Programs like the state’s EITC are crucial to broadening opportunity, as well as making the tax system fairer. (The Hartford Courant)

• New Jersey Policy Perspective objected to the governor’s proposal to give everyone small tax cuts in 2014 but wait until 2015 to restore the state EITC to its 2010 level. It recommended that the EITC be restored to its original level immediately and urged legislators in favor of the governor’s proposal for broad tax cuts to insist that the $60 million to $70 million to restore the state‘s EITC immediately be part of the deal. (Newjerseynewsroom.com, New Jersey Policy Perspective)

• A report from the Treasury Department revealed this week that the IRS is not in compliance with the Improper Payments Elimination and Recovery Act for the EITC because it hasn’t established targets for reducing improper payments or reduced them to less than 10 percent of all payments. The IRS estimates that it issued over $11 billion in improper EITC payments in 2012. House Appropriations Committee Chairman Hal Rogers announced that he expects “heads to roll”. Treasury Secretary Jack Lew reminded him that the EITC is “one of the most effective programs that we’ve had in getting people off of welfare [and] on to work” and that its very complicated. He also pointed out that those who seek the EITC usually go through tax preparers to claim the credit, and that the Treasury is working with those preparers to reduce error rates. (The Huffington Post, The Hill)

• A new fact sheet from the Center on Budget and Policy Priorities highlights research from Brookings and the Carsey Institute showing that in 2010, 22.9 percent of rural tax filers — compared with 20 percent of filers nationwide — claimed the EITC, and that the share of rural EITC filers that also receive the refundable portion of the Child Tax Credit has grown in recent years. (Center on Budget and Policy Priorities)

•  The discussion of tax reform was rejuvenated this week following an announcement from retiring Senate Finance Committee Chairman Baucus that he will focus on an overhaul of the nation’s tax code instead of campaigning for re-election. We blogged about what this may mean for working family tax credits. (Tax Credits for Working Families, The Hill)

• Following talks of tax reform, Sen. Sherrod Brown (D-Ohio) announced plans this week to introduce legislation, titled The Working Families Tax Relief Act, which would make permanent the 2009 improvements to the EITC and Child Tax Credit. (Tax Credits for Working Families, The Hill 1,2)

• Fox Business highlighted research from a new German study showing that programs that help ease the financial burden of child care, such as the Child and Dependent Care Credit, increase labor participation rates, provide an economic boost, increase the birth rate, and largely pay for themselves through increased taxes and Social Security contributions. (Fox Business)

The discussion of tax reform was rejuvenated this week following an announcement from retiring Senate Finance Committee Chairman Max Baucus (D-Mont.) that he will use the time not spent campaigning for re-election to instead focus on an overhaul of the nation’s tax code. While he did not release additional details on his proposed framework for tax reform, he recently wrote a joint op-ed with Rep. Camp, in which they stated that their agreement on tax reform includes three principles, one of which is to “ensure that low-income and middle-income Americans will pay no more taxes than they do under current law.” Whether they can stick to this assurance and still comply with their other principles, which require lowering taxes for businesses, is not clear.

A look back into the chairman’s prior voting history also provides some insight as to how such an overhaul might affect working family tax credits.

Baucus has generally been a strong advocate for tax relief for low-income families, noting once in a public statement the strong correlation between a child’s future income and their parents’ income, and how reforming our tax code to improve economic opportunity and help those in need “can strengthen the American Dream.” In 2010, he introduced legislation titled “The Middle Class Tax Cut Act of 2010” that would have made permanent earlier improvements to the Child Tax Credit, Earned Income Tax Credit, and Dependent Care Credit. The bill was successful in the Senate, but never made it through the House.

This year Baucus voted against the budget plan from Senate Democrats, which included a similar attempt to make permanent improvements to working family tax credits.  However, he appears to have done so because he opposed the level of new revenues it included and because he opposed the “fast track” reconciliation instructions, not because he disagreed with its provisions on tax credits for working families.

His tax reform proposal also has significant implications for working families’ access to other programs. Chairman Baucus has indicated that he is looking for a compromise between the House and Senate budgets on new revenues when he develops a tax reform bill, but it will be difficult to find a balance between the two that allows enough spending to protect all benefits for low-income working families.

• A bill to create a state Earned Income Tax Credit (EITC) at 10 percent of the federal credit and a Child Tax Credit worth $100 for each qualifying child under 6 won approval in the Colorado Senate Wednesday, and is now headed to the House. (MSN Money, The Republic)

• Michigan House Democrats marked “Tax Day” this week with plans to introduce legislation that would require employers to provide their employees with information about the state’s EITC, as well as legislation to increase the credit to 11 percent of the federal EITC and restore a $600 per child tax credit. (MLive.com, WKAR Radio)

• New Jersey Gov. Christie conditionally vetoed a bill restoring the state’s EITC this week, in order to revive his original tax cut plan to create an income tax credit of 10 percent for New Jersey homeowners making less than $400,000. (New Jersey Policy Perspective , NJ.com, The Courier-Post)

• Policy Matters Ohio presented a proposal to the Ohio House Finance and Appropriations Committee last week to create a state-level EITC at 20 percent of the federal credit. (Dayton Daily News)

• Top aides to Vermont Gov. Shumlin told lawmakers Monday that they’re willing to dial back the proposed reduction in the state’s EITC from $17 million to $12 million, but a report released this week by the Public Assets Institute showed how even this reduced cut to the state’s EITC would be especially devastating, considering the credit at its current level is not overly generous. According to the report, Vermont ranked 25th among the states in combined federal and state EITCs in 2011. (Vermont Today, Public Assets Institute)

• Oklahoma‘s governor and House leadership are promoting a cut to the top income tax rate without touching any tax breaks, but Senate President Pro Tem Brian Bingman said his caucus may consider more changes to the governor’s proposal that could include eliminating or reducing tax credits or deductions. So far, however, it looks like the working family tax credits would not be touched, a significant difference from last year’s debate over reducing the income tax. (Oklahoma Policy Blog, NewsOK.com)

• Louisiana Gov. Bobby Jindal is shelving his proposal to swap the state’s income tax and corporate taxes for higher sales taxes, and instead asking lawmakers to develop and pass their own version of a plan to phase out the state’s income tax. Ending Louisiana’s income tax would have eliminated the state version of the EITC. State legislators however have indefinitely tabled any bills to eliminate the income tax. (Nola.com 1, 2, 3)

• A recent brief from Connecticut Voices for Children highlights how Connecticut’s EITC, which went into effect in 2011, has helped to make the state’s tax system more progressive. (Connecticut Voices for Children)

• Steven R. Weisman, editorial director of the Peterson Institute for International Economics, toppled five common myths about taxes in the U.S, including that the tax code has become less progressive overall; while the tax code got less progressive at the top, the expansion of the EITC and CTC has helped improve matters at the bottom. It also debunks the widespread belief that because 47 percent of American households pay no federal income tax, they pay no taxes whatsoever. (The Washington Post)

Our analysis of President Barack Obama’s budget for 2014 released last week  illustrates how challenging it can be to raise tax revenues substantially while protecting low- to middle-income families from tax increases. While certain tax provisions could negatively affect these families, the $3.78 trillion budget primarily targets the wealthy by closing tax loopholes and limiting deductions, and includes permanent improvements to working family tax credits and an increase in funding for community tax assistance in an attempt to mitigate any additional tax burden on low- to middle-income households.

The President’s offer includes a proposal to move from the current Consumer Price Index (CPI) to a “chained CPI.” We blogged about what this switch would mean for tax credits for working families back in December, when a chained CPI was being considered as part of fiscal cliff negotiations.

In short, a chained CPI attempts to account for how people shift their purchases from one area of spending to another when prices rise, resulting in a lower inflation rate than the traditional method of calculating the CPI.  The maximum value of the Earned Income Tax Credit (EITC), as well as the level at which the EITC begins to fade out, and at which the credit can no longer be claimed at all, are all updated for inflation each year. Since the chained CPI produces a lower rate of inflation than the current CPI, this would reduce the value of the EITC over time. The impact on the Child Tax Credit (CTC) is much more complicated; only the threshold at which people can begin to claim the CTC is indexed to inflation, and that threshold is temporarily on hold through 2017 while a $3000 threshold applies.

President Obama’s proposal would also apply the chained CPI to other tax provisions that benefit low and moderate income families, including the personal exemption and standard deduction. Reducing the value of these tax provisions over time would inevitably raise taxes on these families.

While a chained CPI and a proposed tax increase on tobacco products could increase taxes for low and moderate income households, the budget also includes a number of proposals to outweigh any potential burden on these families, so much so that the Washington Post has identified low-income taxpayers as one of the biggest groups of policy “winners” in the proposal.

The President’s offer would make permanent the 2009 improvements to the EITC and Child Tax Credit, which were scheduled to expire in 2017. Under the American Recovery and Reinvestment Act, the EITC was expanded to provide extra support for families with three or more kids, as well as provide relief for married couples from the credit’s so-called “marriage penalty,” and the Child Tax Credit’s income-eligibility threshold was lowered from around $12,000 to $3,000.

The budget also calls for a 50% increase in funding for Volunteer Income Tax Assistance (VITA) programs, from the current $12 million to $18 million, benefiting the millions of working families that rely on VITA sites to help them claim and keep the EITC and other credits, rather than pay these refunds in fees to commercial preparers.

While President Obama’s budget won’t be enacted as is, it’s a great illustration of the goals and priorities of the administration, particularly when it comes to shielding low-income families from harmful tax increases. It offers insight into how the administration will proceed if an opportunity arises to restructure the tax code, or if other opportunities arise to protect and improve working family tax credits throughout the legislative process.

• Members of the Maine Legislature’s Taxation Committee voted this week against a provision of Gov. Paul LePage’s proposed state budget that would have barred anyone younger than 65 from taking advantage of the state’s property tax circuit breaker, called the Residents Property Tax and Rent Refund. The committee is now preparing recommendations for the Appropriations Committee for alternate ways to balance the budget. (The Maine Sun Journal, Bangor Daily News)

• The Minnesota House Property and Local Tax Division passed its Division Report this week, which would increase the state’s Renters’ Credit by $15.5 million and the Property Tax Refund (known as the Circuit Breaker) for homeowners by $157 million in FY 2015. It would also include funding for outreach to the one-third of eligible tax payers that don’t claim the Circuit Breaker. The Division Report now will go to the House Tax Committee for incorporation into the omnibus tax bill. (Twin Cities Daily Planet, Minnesota Budget Bites)

• A new policy brief from the Iowa Fiscal Partnership highlights the need to increase the state Earned Income Tax Credit (EITC) to help working families pay for basic necessities, pointing to the fact that half the jobs in Iowa pay less than the $32,300 needed by a single parent to cover the monthly expenses of food, rent, child care, transportation, and other essentials. The organizations that run the state’s volunteer tax assistance sites voiced their support this week for an increase in the state EITC from 7 percent to 20 percent of the federal credit. (Iowa Fiscal Partnership, Des Moines Register)

• Policy Matters Ohio unveiled an interactive map today that shows the potential benefits of a state EITC for taxpayers in different counties. The group is pushing for the creation of an EITC between 10 and 20 percent of the federal credit as a progressive replacement for Republican Gov. John Kasich’s proposed tax plan. (City Beat, Policy Matters)

• Tazra Mitchell, a public policy fellow at the North Carolina Budget and Tax Center, highlighted research showing how lawmakers’ decision to eliminate the state’s EITC at the end of year will hit especially hard among the women who collected the credit to help pay for basic necessities. (The Triangle Tribune) 

• Vermont Gov. Peter Shumlin’s plan to finance a major expansion of child care programs by taking $17 million from the state’s EITC has divided members of the state’s early childhood community, many of whom support an increase in child care funding but do not want the money to come from a program that supports low- to middle-income families. The Senate Finance Committee will be looking at this issue in the coming weeks and committee chairman Tim Ashe says he’ll strongly oppose the Governor’s plan to scale back the EITC. (Vermont Public Radio)

• The Michigan League for Public Policy highlighted the story of Christina, a working mother of three who watched her taxes go up after Michigan‘s EITC was reduced from 20 percent to 6 percent of the federal credit in 2011. (Michigan League for Public Policy)

• Key tax components of President Obama’s recently unveiled 2014 budget include making permanent the 2009 improvements made to EITC and Child Tax Credit. (Governing, CNN, The Washington Post)

• On Tuesday, we blogged about legislation being introduced in the House and Senate to make improvements to the EITC and Child Tax Credit permanent. In the House, Rep. Rosa DeLauro (D-CT) has introduced the Child Tax Credit Permanency Act of 2013, which would make permanent the lower threshold for receiving the Child Tax Credit and the indexing to inflation. In the Senate, Sen. Richard Durbin (D-IL) is planning to introduce legislation that would make permanent the EITC’s extra support for families with three or more kids, as well as married couples’ relief from the credit’s so-called “marriage penalty,” and the Child Tax Credit’s lowered income-eligibility threshold. (Tax Credits for Working Families)

• A new report (pdf) from the Center on Budget and Policy Priorities sums up recent research, finding that children of EITC recipients are born healthier, do better in school, are more likely to attend college and earn more as adults. (Center on Budget and Policy Priorities, Think Progress)

• Sean Noble, Director of Public Policy & Research at the National Community Tax Coalition (NCTC), stopped by our blog to talk about court papers filed by NCTC and the National Consumer Law Center to protect consumers from fraud by retaining regulations for commercial tax preparers. Paid preparers handle two-thirds of the tax filings that claim the EITC and other working family tax credits, so improving the quality of their work would protect millions of working families against erroneous tax filings.(Tax Credits for Working Families)

• Lilian V. Faulhaber, a professor of law at Boston University, presented a number of ways in which the tax code disadvantages working mothers and suggested increasing the federal Child and Dependent Care Credit to reflect higher costs of raising children and help these working mothers cover basic necessities. (The New York Times)

• Blackanthem Military News reminded military personnel that because combat pay does not factor into their overall income, they are likely to qualify for the federal EITC and can collect the credit to ease their tax burden. (Blackanthem Military News)

(A version of this commentary also appears on WorkForward, the blog of the National Community Tax Coalition.)

Retaining basic, common-sense regulations of commercial tax preparers is critical to protecting consumers from fraud, abuse, and incompetence, we’ve reiterated in court papers filed last week.

The National Community Tax Coalition (NCTC) joined the National Consumer Law Center in filing an amicus curiae (“friend of the court”) brief on April 5 in the U.S. Court of Appeals for the District of Columbia Circuit. Our move comes in support of the IRS attempts to reinstate paid-preparer rules recently struck-down by a lower court decision.

“Without such regulation, consumers are at the mercy of an industry with no minimum training or competency standards for one of the most critical financial transactions that consumers engage in every year,” according to the amicus. “… (C)onsumers may become the victims of incompetence or fraud by preparers through no fault of their own, yet taxpayers are ultimately responsible for wrongly prepared tax returns.”

The brief cites examples of such problems, which the rules were designed to help curb among paid preparers – people who handle taxpayers’ most sensitive financial information. The regulations – which the IRS had been phasing-in since 2009 – include registration of paid preparers, mandatory training, a competency exam, certification and continuing education to ensure preparers remain versed in the details of ever-changing tax laws.

However, several commercial preparers sued the IRS to stop the regulations. A judge for the U.S. District Court for the District of Columbia decided that the IRS lacked the statutory authority to impose such standards, and halted the rules just as tax season began in January.

The IRS disagreed, and appealed that decision in February. It remains unclear exactly when the case could be argued before the appellate court.

In addition to the NCLC-NCTC amicus, five former IRS commissioners have filed a brief arguing the IRS does, indeed, possess the proper legal authority for such regulations.

Some commercial preparers maintain that compliance with the regulations was too expensive. However, the consumer advocates’ amicus notes paid-rep registration cost less than $65 and a competency exam cost less than $120, compared with the hundreds of dollars in fees that a preparer can charge a single client.