Democrats are touting monthly checks for parents in the stimulus, but they may not be monthly after all
Democrats want monthly payments for parents, but the IRS faces challenges rolling out the program.
The IRS commissioner recently said it may be a "challenge to get into monthly right out of the box."
Experts say the IRS could settle on quarterly payments. Democrats fear another healthcare.gov.
The beefed-up child tax credit from President Joe Biden's stimulus law has been touted by Democrats as a key measure designed to slash child poverty in half. They aim to make it permanent, a step that would represent a major expansion of the American social safety net.
The one-year measure authorized in mid-March is set to provide a $3,600-per-child benefit to parents with children age 5 and under, issued through "periodic payments." It is expected to be $3,000 for each child between 6 and 17. Democrats want to enable the option of a monthly check - and they've been touting that too.
Biden said on Wednesday at the White House that a family with two children under the age of 6 would get $500 a month mailed to it by the federal government. "That's life-changing," he added.
That last part could be a hurdle, as the Internal Revenue Service simply may not be able to meet a monthly schedule of payments.
Congress is giving the IRS three and a half months to stand up the sweeping new initiative, set to start July 1. But this comes in the middle of one of the most daunting tax seasons in its history, as the agency grapples with a backlog of at least 12 million tax returns. It's such a big task that the IRS recently extended the tax-filing deadline from April 15 to May 17 for individuals.
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Charles Rettig, the IRS commissioner, cited this significant strain at a recent House committee hearing when he warned of potential delays in distributing the child-tax-credit benefit by July. The readiness of the IRS to carry this out poses a major challenge to Democrats' goal of getting payments out the door to 66 million American children every month.
"I would not be surprised to see payments start in July, but I would also not be surprised to see this turn into a quarterly benefit where the first payments came in October and the second payment in December," said Elaine Maag, a tax expert at the nonpartisan Tax Policy Center.
Maag said carrying it out this year is "lightning fast" and the IRS is well known to use old computer systems and databases.
Other experts also noted the brief time frame the IRS was given to devise a program from the ground up, another burden on a historically underfunded organization already facing problems this tax season.
"Setting up a program in three months is not something that's typically done, and any agency would have had challenges," said Samantha Jacoby, a senior tax analyst at the liberal-leaning Center on Budget and Policy Priorities.
The original law underpinning the benefit, known as the American Family Act, gave the Treasury and the IRS a year to set up a monthly benefit system. Some Democrats worried about any comparisons to the mismanaged rollout of another signature expansion of the safety net: the Affordable Care Act, specifically the healthcare.gov website.
Jeffrey Jones, the CEO of H&R Block, said to Insider earlier in March, at the beginning of tax season, that the IRS hadn't made any decisions yet on how to actually execute the changes involved with the child tax credit. He called it "one of the most underappreciated civil servants in the country," and said the agency's underfunding problems are well documented, and that even in a normal year, "their system gets taxed" or overwhelmed.
The CTC isn't top of the IRS priority list right now
The IRS faces a hectic spring. Maag said that on top of distributing stimulus payments, it is also implementing tax forgiveness for unemployed workers and attempting to issue refunds for people who filed early.
"The child tax credit is not first in line right now, and the IRS has limited staff that they can devote to any problem," she said. "It is problematic that they have a lot of things to do and limited resources to do it with."
Rettig also told House Ways and Means lawmakers the decision to prolong tax season by a month would cut into the ability of its employees to develop a new online portal. That's supposed to be the space for Americans to share up-to-date information about their income and number of children.
"We're focused on trying to get these payments out to people in a meaningful manner, in a meaningful time frame," he said.
Democrats provided the IRS with nearly $2 billion in extra funding to bring on more personnel and upgrade aging systems, after a decade of Republican-led budget cuts.
Still, Democrats involved with the measure said they'll work with the IRS in the months ahead. Connecticut Rep. Rosa DeLauro said she was confident the IRS would be successful. She cited the additional money for the organization and "the will to get these payments out monthly."
"We will work through issues as they arise and ensure the IRS has the tools they need to make these payments to everyone who has qualifying children," the senior Democrat said in a statement to Insider.
Washington Rep. Suzan DelBene, another architect of the child benefit, echoed DeLauro.
"I'll still continue to work with them as they implement this program because those resources are so important to families right now, and we want to make sure that it is done well from the get-go," she said.
'Everyone wants to avoid any potential healthcare.gov 2.0'
Experts said the success of the program hinges on the capacity of the federal government to issue payments to people who don't typically pay taxes because they don't earn enough income to be required to file.
"The IRS' outreach efforts are going to be really important trying to get new populations of people into the tax system," Jacoby said.
Lawmakers are eager to avoid problems that could overshadow the early rollout of a highly touted Democratic program. They want to dodge comparisons to the bungled unveiling of healthcare.gov, a website created under President Barack Obama to allow people to buy health insurance under the Affordable Care Act. Many struggled to obtain coverage for weeks.
"Everyone wants to avoid any potential healthcare.gov 2.0.," a House Democratic aide familiar with ongoing discussions told Insider. "Looking at the healthcare.gov example is a great justification for making sure we get this right and making sure the IRS is thoughtful - that they really kick the tires on this, and they are thoughtful in implementing so it's easy to use and families aren't confused."
Regardless, people are likely to receive a substantial sum of money this year, though it may not be through monthly installments as Democrats originally envisioned.
"This was always going to be hard," Jacoby said. "Whether it's monthly or quarterly or something else, people are still going to get a lot of money they need in 2021 - even if there's administrative hiccups along the way."
The White House did not immediately respond to Insider's requests for comment.
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