Congressmen Blake Moore (R-UT) and Lloyd Smucker (R-PA) introduced the Protecting Adopting Families from Audits Act of 2022 to provide Congress the information needed to ensure administration of the Adoption Tax Credit is fair and does not pose unnecessary burdens to those who adopt.
“Throughout my first term in Congress, I have consistently advocated for families navigating the adoption process,” said Congressman Blake Moore. “I am proud to introduce the Protecting Adopting Families from Audits Act with Congressman Smucker to help us better understand how the IRS administers the Adoption Tax Credit and to prevent future issues—including unfair auditing rates—that may complicate the process for families pursuing adoption. The adoption process is already arduous and expensive, and we must do all we can to ensure the Adoption Tax Credit is administered fairly and efficiently so children in need find forever families.”
“An IRS audit is no way to show thanks to families who are adopting children,” said Congressman Lloyd Smucker. “Yet, that appears to be exactly what is happening to the overwhelming majority of families claiming the Adoption Tax Credit, according to the most recent data from the Taxpayer Advocate Service. Adoption is already a timely and expensive process for families. Parents trying to build strong families should not face undue burdens. I thank Rep. Moore and my colleagues for advancing this important legislation.”
In the past, those who claim the Adoption Tax Credit (ATC) were subjected to high audit rates. The National Taxpayer Advocate 2012 Annual Report to Congress found that nearly 70% of claimants of the ATC were audited in the 2012 filing season. While the Internal Revenue Service (IRS) has taken action to address this problem, Congress has not yet received data confirming this issue has been properly resolved. The IRS also decided against following all of the recommendations from the GAO to resolve this issue. Because of the lack of data on audit rates and the potential for a renewed focus on auditing from the IRS, there are concerns that unfair audit rates could return in the future. To fill in information gaps and provide ongoing oversight, the Protecting Adopting Families from Audits Act would require the IRS provide three types of reports to the House Ways & Means and Senate Finance committees to seek:
transparency into the audit rates of those who have received the Adoption Tax Credit since 2008;
an annual report on Adoption Tax Credit audit rates through 2032, which will provide insight into how the Inflation Reduction Act impacts audit rates; and
insight into how the IRS audits personal tax credits differently depending on if they are refundable or non-refundable.
“Thank you to Congressman Moore for his continued efforts to support adoption,” said Ryan Hanlon, President and CEO of National Council For Adoption (NCFA). “NCFA welcomes this opportunity to learn more about how the Adoption Tax Credit has been utilized and to ensure adoptive families are not specifically targeted for audits just because they chose to adopt.”
“When the Adoption Tax Credit was refundable in 2010 and 2011, we heard from hundreds of families—especially those who adopted from foster care—who were subjected to lengthy IRS audits as a result of claiming the Adoption Tax Credit,” said the North America Council for Adoptable Children. “This bill would ensure that we know if such audits are continuing at high rates and would help reduce unnecessary burdens on families legally claiming a credit for building their family through adoption.”
“Raise the Future programming works together to support foster care involved youth and families at every step of their relationship journey,” said Ann Ayers, CEO of Raise the Future. “That is why we fully support the work of Representative Moore and his Protecting Adopting Families from Audits Act. It is important for our youth and families to feel safe and supported as they navigate this life together.”
This bill enjoys support from the National Council For Adoption, the North American Council on Adoptable Children, and Raise the Future.