Finance

GOP lawmakers raise concerns about child tax credit expansion

Top Republicans on the House Ways and Means Committee are raising concerns about the expansion of the child tax credit (CTC) contained in President Biden's coronavirus relief law.

The relief law makes several changes to the credit for 2021, including by increasing the credit amount, making the credit fully refundable, and directing the IRS to make advance payments of the credit on a periodic basis. Republicans are concerned that the advance payments of the credit could lead to an increase in improper payments.

"The new CTC and other provisions in [the American Rescue Plan] fail to learn from lessons of the past, are not targeted to pandemic relief, and risk the loss of billions of taxpayer dollars in fraudulent and improper payments," Reps. Kevin Brady (R-Texas) and Mike Kelly (R-Pa.) wrote in a letter to Gene Sperling, who is coordinating implementation of the relief package at the White House. Brady is the ranking member of the Ways and Means Committee, and Kelly is the top Republican on the committee's oversight subcommittee.

Democrats say the expansion of the child tax credit in their relief package is important in order to reduce child poverty. Republicans had previously expanded the credit in their 2017 tax-cut law, and some GOP lawmakers have expressed an interest in expanding the credit further. But many Republicans take issue with the specific provisions in the relief law, which passed Congress without any support from GOP lawmakers.

Brady and Kelly said that the credit has a history of having a high improper payment rate that stems both from errors and fraud.

"A new, monthly payment system will likely lead to an increase, rather than a decrease in improper payments," the lawmakers wrote.

Brady and Kelly also said that there has been a high level of fraud related to the expanded unemployment benefits first authorized last year, and said that payments of the child tax credit could be "an even more powerful fraud magnet."

The GOP lawmakers asked Sperling for written certification that the payments will be implemented with safeguards aimed at preventing improper payments, as well as information about how the advance payments will be implemented "without costly IRS burdens or intrusions into taxpayer privacy, such as constant monitoring of changing family status." The lawmakers also asked Sperling if the Biden administration plans to make the expansion permanent.

Brady and Kelly also sent letters to the IRS, the Treasury Inspector General for Tax Administration (TIGTA) and the Government Accountability Office (GAO) in which they expressed concerns about the risk of improper payments of the advance payments of the child tax credit.

A GAO spokesperson confirmed that it received the letter sent to it, and a TIGTA spokesperson said that it was reviewing the letter it received. The White House and the IRS did not immediately respond to inquiries from The Hill about the letters.

During Monday's White House press briefing, press secretary Jen Psaki was asked if the administration wants to make the child tax credit expansion permanent. Psaki did not give a direct answer but said that Biden thinks the expansion of the credit is beneficial. The White House in planning in the future to release a proposal for a recovery package that's focused on helping families.

-- Updated at 3:56 p.m.

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