The Earned Income Tax Credit is the most audited provision in the tax code. The IRS scrutinizes EITC claims more than any other credit because of the historically high error rate. If you claimed EITC and received a CP75, the IRS wants proof that you qualify.
What the IRS Wants
The CP75 asks for documentation proving three things: your income qualifies, your qualifying children actually qualify, and you meet the residency requirement. The documentation they typically request includes birth certificates or adoption records for qualifying children, school records showing the child's address matches yours, medical records listing your address, lease agreements or mortgage statements proving residency, W-2s and pay stubs verifying income, and childcare provider information.
The letter lists exactly what they need. Don't guess. Don't assume one document will cover everything. Send exactly what they ask for, and send all of it.
The Stakes Are High
If the IRS denies your EITC claim, you lose the credit for the year under examination. But it gets worse. If the denial is due to reckless or intentional disregard of the rules, the IRS bans you from claiming EITC for two years. If the denial is due to fraud, the ban is 10 years. During the ban period, you must file Form 8862 to reclaim the credit, and the IRS will scrutinize your claim heavily.
The EITC can be worth over $7,000 for a family with three qualifying children. A two-year ban means losing up to $21,000 in credits across three tax years. A 10-year ban is catastrophic for low-income families who depend on this credit.
Common Mistakes
The most common mistake is sending partial documentation. The IRS asks for five items, you send three, they deny the credit for insufficient documentation. Now you're in Appeals trying to submit what you should have sent the first time.
The second most common mistake is claiming a child who doesn't meet the residency requirement. The child must live with you for more than half the year. Joint custody situations create gray areas, but the IRS applies the rule strictly.
Respond Completely and On Time
You typically have 30 days to respond. Gather everything the letter requests. Organize it by category. Include a cover letter referencing the CP75 notice number. Send it certified mail with return receipt.
If you can't gather everything within 30 days, call the number on the notice and request an extension before the deadline passes. The IRS will often grant 30 additional days.
If you've received a CP75, call us at (813) 229-7100. We handle EITC audits and know exactly what documentation satisfies the IRS.