Recertification of the Credit
No earned income credit is allowed for any tax year after any tax year a taxpayer is denied the earned income credit as a result of deficiency procedures of the Code, unless the taxpayer provides information that IRS may require to demonstrate eligibility for the credit. That is, a taxpayer who has been denied the EIC as a result of deficiency procedures is ineligible to claim the credit in later years, unless the taxpayer provides evidence of eligibility that meets evidence requirements established by the IRS.
Example - Recertification of EIC - Annie claimed the earned income credit for Year 1 and Year 2. IRS sent her a 90-day letter denying the credit for those years. She didn't file a Tax Court petition and didn't otherwise respond to the statutory notice. Therefore, IRS made the assessment and denied the credit. Annie can't claim an EIC for any year after Year 2, unless she provides the information required by IRS to recertify the credit.
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The recertification procedures can apply if a taxpayer is subject to the 2- or 10-year disallowance periods. However, recertification isn't required if IRS disallows all or part of the credit because of a mathematical or clerical error (such as claiming the credit based on self-employment earnings without paying the correct self-employment tax or claiming the credit after a previous denial as the result of deficiency procedures without becoming recertified). Recertification also isn't required if IRS denies the credit through the deficiency procedures, but the Tax Court (or an appellate court reviewing the Tax Court) decides the taxpayer is eligible to claim the credit.
IRS will send the taxpayer information about how to become recertified. If the taxpayer claims the credit without first being recertified, the claim will be automatically denied. Ineligibility for the earned income credit under the above rules is subject to review by the courts.