On August 19, 2026, the Treasury Department and IRS issued proposed regulations (IR-2026-93) implementing federal law restrictions on refundable tax credit eligibility for individuals not lawfully present in the United States. The regulations, authorized under the Working Families Tax Cuts (WFTC) and consistent with the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) Sections 401 and 411, establish verification protocols for the Earned Income Tax Credit (EITC), Additional Child Tax Credit (ACTC), and American Opportunity Tax Credit (AOTC) refundable portions. The rules mandate Social Security Number (SSN) validation for all credit claimants and qualifying children, enhance the IRS’s Systematic Alien Verification for Entitlements (SAVE) system integration, and impose heightened due diligence requirements on paid preparers under Section 6695(g).
Key Takeaways
- Mandatory SSN Verification for All Claimants: The regulations require valid SSNs issued before the return due date (including extensions) for the taxpayer, spouse, and each qualifying child for EITC/ACTC/AOTC refundable components, eliminating ITIN eligibility for these credits.
- Enhanced SAVE System Integration: The IRS will cross-reference credit claims with DHS SAVE data in real-time during return processing, enabling automated denial of refundable portions for mismatched records before refund issuance.
- Preparer Due Diligence Expansion: Paid preparers must now document citizenship/immigration status verification for all refundable credit clients, with expanded Form 8867 checklists and increased Section 6695(g) penalties ($600 per failure, indexed) for non-compliance.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement