In March of this year, Congress passed the American Rescue Plan Act (ARPA), which, among other things, made the poorest Americans eligible for the Child Tax Credit for the first time. When the legislation was being debated, we published many pieces pointing out that using the tax system to get money out to the poorest Americans would not work because most Americans in deep poverty don’t file taxes.
Congress and the Biden administration ignored these warnings and insisted that they would reach these non-filers by setting up a website where they could submit an empty tax form and thereby become signed up for the monthly CTC checks.
The first website set up for this purpose was created by Intuit. It looked like a scam website and the IRS never released any information about how many people actually managed to sign up through that site. The next website set up for this purpose was created by Code for America. It was a good-looking website and actually has a dashboard that reports how many non-filers have managed to sign up for the benefit.
Between August 12 and October 12, only 24,485 people managed to sign up through the Code For America non-filer website. Troublingly, 2 in 3 people who tried to sign up through the website failed to do so.
The prior CTC non-filer website, which was set up by Intuit, was primarily in use between June 14 and August 12. We do not know how many people signed up through it, but it was probably similar to the ~25,000 figure posted by Code for America.
When the first monthly CTC payment was made in July, the Treasury reported that 720,000 kids in non-filing tax units had been included because their parents had signed up for one of the three Economic Impact Payments (EIPs) paid out in 2020 and early 2021.
If we add the approximately 50,000 kids signed up through the non-filer websites, then we get 770,000 non-filing kids who are currently receiving the monthly CTC benefit. This is just 14 percent of the 5.5 million kids living in non-filing tax units.
Most Democrats want to extend this program for at least a few more years in the reconciliation bill currently being debated in Congress. But they have yet to grapple with the reality that the way they’ve designed the program doesn’t actually work. In the current House version of the reconciliation bill, they give the Treasury $1 billion and direct the agency to use it to increase enrollment. But this is not going to cut it. More significant and substantive changes to the program, such as those I outlined here a couple of months ago, will likely be necessary.