**GAO-12-98**                      Published: Oct 20, 2011. Publicly Released: Nov 21, 2011.                  

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## Highlights

The federal adoption tax credit, established in 1996, was amended in 2010. These amendments included making the credit refundable (meaning taxpayers could receive payments in excess of their tax liability) and increasing the maximum allowable credit to $13,170 of qualified adoption expenses for tax year 2010. As of August 20, 2011, taxpayers filed just under 100,000 returns, claiming about $1.2 billion in adoption credits. Following these changes, the Internal Revenue Service (IRS) developed a strategy for processing adoption credit claims. GAO was asked to (1) describe IRS's strategy for ensuring compliance with the adoption credit for the 2011 filing season, (2) assess IRS's related communication with taxpayers and stakeholders, and (3) assess its processing and audit of claims. To conduct its analysis, GAO analyzed IRS data and documents, interviewed IRS officials, observed IRS examiners, and interviewed other stakeholders.

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## Topics

Tax Policy and Administration

AuditsChild adoptionClaims processingCommunicationDocumentationExpense claimsIncome taxesReporting requirementsStrategic planningTax administrationTax creditTax refundsTax returnsTaxpayersStakeholder consultations