EITC Notice Clarifications: English and Spanish (2-13-08)

By Michael C. Saqui and Anthony P. Raimondo

Some employers have asked about how to comply with the new Earned Income Tax Credit (“EITC”) notice requirements which must be delivered to employees.

Since January 1, 2008, California employers have been required under a new state law (the “Earned Income Tax Credit Information Act”) to notify employees of their possible eligibility for the federal EITC. The notice must be delivered individually to each employee within one week (before or after) of providing the W-2 annual wage summary, and must contain either (1) instructions on how to obtain relevant IRS notices, such as Notice 797 (available at http://www.irs.gov/pub/irs-pdf/n797.pdf ) and Form W-5, or (2) the following text, or language which is “substantially similar”:

Based on your annual earnings, you may be eligible to receive the Earned Income Tax Credit from the federal government. The Earned Income Tax Credit is a refundable federal income tax credit for low-income working individuals and families. The Earned Income Tax Credit has no effect on certain welfare benefits. In most cases, Earned Income Tax Credit payments will not be used to determine eligibility for Medicaid, Supplemental Security Income, food stamps, low-income housing or most Temporary Assistance for Needy Families payments. Even if you do not owe federal taxes, you must file a tax return to receive the Earned Income Tax Credit. Be sure to fill out the Earned Income Tax Credit form in the federal income tax return booklet. For information regarding your eligibility to receive the earned income tax credit, including information on how to obtain the IRS Notice 797 or Form W-5, or any other necessary forms and instructions, contact the Internal Revenue Service by calling 1-800-829-3676 or through its web site at www.irs.gov .

The following is a Spanish of the same text, which will satisfy the EITC Act’s content requirement for Spanish-speaking employees:

Basado en sus ganancias anuales, usted puede ser elegible para recibir el Crédito por Ingreso del Trabajo del gobierno federal. El Crédito por Ingreso del Trabajo es un crédito del Impuesto Federal Sobre Ingresos reembolsables para trabajadores individuales y familias de bajos ingresos. El Crédito por Ingreso del Trabajo no tiene ningún efecto en ciertos beneficios sociales. En la mayoría de los casos, los pagos del Crédito por Ingreso del Trabajo no serán usados para determinar la elegibilidad del Seguro de enfermedad (Medicaid), Seguridad de Ingreso Suplementario, vales de comida, vivienda de bajos ingresos o la Asistencia Temporal para Familias Necesitadas. Incluso si usted no debe impuestos federales, usted debe presentar una declaración de impuestos para recibir el Crédito por Ingreso del Trabajo. Esté seguro de llenar la forma para el Crédito por Ingreso del Trabajo en el folleto de declaración federal de impuestos. Para mayor información referente a su elegibilidad para recibir el Crédito por Ingreso del Trabajo, incluso la información de como obtener el Aviso del IRS 797 o la Forma W-5, o cualquier otra forma e instrucciones necesarias, contacte al Servicio de Impuestos Internos llamando al 1-800-829-3676 o por su sitio en la Web www.irs.gov .

To be eligible for the EITC for Tax Year 2007 (2008 filing season), earned income and adjusted gross income (AGI) must each be less than:

* $37,783 ($39,783 married filing jointly) with two or more qualifying children;

* $33,241 ($35,241 married filing jointly) with one qualifying child;

* $12,590 ($14,590 married filing jointly) with no qualifying children.

COUNSEL TO MANAGEMENT:

Employers must update their policies and procedures to reflect the EITC notice requirements, along with other recent changes in the law (see our End of Year Update, available on our website, for a summary of notable changes). With regard to what must be communicated to employees to comply with the Earned Income Tax Credit Information Act, employers are strongly encouraged to deliver notices which use the exact text quoted above, along with a Spanish translation. This will avoid possible confusion or disputes over the sufficiency of the notice, and ensure compliance with the EITC Act.

The goal of this article is to provide employers with current labor and employment law information. The contents should neither be interpreted as, nor construed as legal advice or opinion. The reader should consult with Saqui & Raimondo at (831) 443-7100 in Salinas, or (916) 782-8555 in Sacramento for individual responses to questions or concerns regarding any given situation.

< Prev		Next >