The Child Tax Credit Non-Filer Tool Is a Mess


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Richard Neal

This week, the IRS launched its “Non-filer Sign-up Tool” for households that are eligible for the newly expanded Child Tax Credit (CTC) but do not typically file taxes because their income is too low. As we have pointed out here in several pieces, there are design flaws with the CTC that will make it unnecessarily difficult—both for households and for administrators—to get these benefits to the very poor who stand to gain the most from the program.

Judging by messaging coming out of the White House, the expanded CTC is the administration’s flagship antipoverty program. Fact sheets published by the administration continue to cite estimates that the program will “[cut] child poverty by more than half”. These estimates, however, depend on the program generating a 100% participation rate which, as we have discussed previously, will be difficult to achieve under the statutory constraints as well as unfortunate administrative execution.

The Non-filer Sign-up Tool

The Non-filer Sign-up Tool is a website provided under an agreement between the IRS and the Free File Alliance, a consortium of tax preparer firms, including Intuit. The agreement provides that the IRS will not offer free filing services, and instead the firms in the Free File Alliance will provide some free filing services at the IRS’ behest over the term of the agreement. 

So, apparently, this Non-filer Sign-up Tool falls in the bucket of a tax filing service, since technically the IRS is asking non-filers to “file” their taxes and simply check a box stating that their income was below the filing requirement threshold for the tax year. In that case, it would be the Free File Alliance who would have to provide this new filing tool. So let’s take a look at what they came up with.

This is the Non-filer Sign-up Tool on a laptop computer with a standard browser. It looks simple enough, if a little scammy. There do not appear to be any indications, either textual or graphical, that this is an official tool provided by, or at the behest of, the United States government. The only note at the bottom of the page states, somewhat disconcertingly, that the site is “C-Level Security Certified”. 

Any webpage anticipating millions of hits from Americans in 2021 should also be mobile friendly. But here’s how the Non-filer Sign-up Tool looks on a mobile browser:

This is barely usable just from a user experience perspective, and it’s also unclear how much of the tool’s functionality remains on the mobile version. I asked Intuit (and the Free File Alliance which also has a Twitter page, though it hasn’t posted anything since 2019) on Twitter if they could help with this issue on mobile. A customer service representative named Rose, posting from Intuit’s QuickBooksCares account, replied:

“Thanks for reaching out, Paul. This website was created by the IRS. It does appear to work best on a computer. I suggest giving that a try. ^Rose”

So we have the IRS claiming via its agreement with the Free File Alliance that FFA creates and manages the tools, while a member firm of the FFA is claiming here that, actually, it is the IRS who created and manages this tool. It is unclear who is correct, but it is very reminiscent of the finger-pointing between firms and the government following the Healthcare.gov fiasco during the Obamacare rollout.

On top of all of this, the tool also integrates with ID.me, a tech firm that bills itself as an identity verification platform. The firm retained contracts with states across the country during the pandemic to help prevent fraudulent claims for various new benefits, such as expanded unemployment insurance. However it has been roundly criticized by advocates for making the verification process exceedingly difficult for the poor, and blocking completely valid benefit claims.

The Very Poor Don’t Have Computers

Why, one might ask, do these very poor people our new program is designed to help not just open up their Macbooks and log on to the site that way? Unfortunately, the very poor are far less likely to have a computer at home than middle and upper income households. They are, however, much closer to middle and upper income households in terms of smartphone ownership, which is why it would make perfect sense to have a well-designed and mobile-friendly tool.

The 2019 American Community Survey’s Microdata file actually asks survey respondents whether they have any computers—laptop or desktop—at home, and we can easily plot this data out across income percentiles. 

The households who the non-filer tool intends to serve—those below the $12,000 individual earnings or $24,000 married couple earnings thresholds—are around the 10th income percentile and below. The ACS data shows that about half of these very poor households who are supposed to use this computer-only tool—and importantly, whose participation in the CTC is required if we are really going to cut child poverty in half, as the White House claims we will—do not have a computer at home.

Blame Intuit, But Joe Biden Must Fix It

The issues with getting the very poor into this program appear to be, at least in part, artifacts of anticompetitive agreements between the IRS and members of the Free File Alliance. These firms know that the IRS obviously has the capability to provide higher quality and lower-cost tax filing services to the public. Such a competitive public option for tax filing would clearly drive most of them out of business, so they spend their money and lobbying efforts on making sure the public never gets such a public option. In general, it’s the public who loses here. And in the case of the CTC, it’s the most impoverished children in our society who will lose out due to Intuit’s greed.

We can and should build a coherent welfare state to meet the basic needs of everyone in our society. The CTC has design problems that hamper its ability to rise to that challenge, and PPP has criticized those flaws. But the Non-filer Sign-up Tool is a huge red flag that, beyond the design flaws, there are administrative issues with the program. The difference is, for some of those administrative issues, like the problems with this tool, Joe Biden does not need a single vote to fix them. He just needs to call up Janet Yellen and demand an immediate fix. He is the President, after all, and his flagship program is on the line.

Longer term, the IRS needs to rip up these mafia-like agreements with Intuit and the FFA, and create a free, public tax-filing service administered by the government itself. The American public deserves to not be treated like fools by profit-seekers like Intuit.