[Code of Federal Regulations]
[Title 26, Volume 1]
[Revised as of April 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.32-3]

[Page 102-103]
 
                       TITLE 26--INTERNAL REVENUE
 
     CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY
 
PART 1--INCOME TAXES--Table of Contents
 
Sec. 1.32-3  Eligibility requirements after denial of the earned income credit.

    (a) In general. A taxpayer who has been denied the earned income 
credit (EIC), in whole or in part, as a result of the deficiency 
procedures under subchapter B of chapter 63 (deficiency procedures) is 
ineligible to file a return claiming the EIC subsequent to the denial 
until the taxpayer demonstrates eligibility for the EIC in accordance 
with paragraph (c) of this section. If a taxpayer demonstrates 
eligibility for a taxable year in accordance with paragraph (c) of this 
section, the taxpayer need not comply with those requirements for any 
subsequent taxable year unless the Service again denies the EIC as a 
result of the deficiency procedures.

[[Page 103]]

    (b) Denial of the EIC as a result of the deficiency procedures. For 
purposes of this section, denial of the EIC as a result of the 
deficiency procedures occurs when a tax on account of the EIC is 
assessed as a deficiency (other than as a mathematical or clerical error 
under section 6213(b)(1)).
    (c) Demonstration of eligibility. In the case of a taxpayer to whom 
paragraph (a) of this section applies, and except as otherwise provided 
by the Commissioner in the instructions for Form 8862, ``Information To 
Claim Earned Income Credit After Disallowance,'' no claim for the EIC 
filed subsequent to the denial is allowed unless the taxpayer properly 
completes Form 8862, demonstrating eligibility for the EIC, and 
otherwise is eligible for the EIC. If any item of information on Form 
8862 is incorrect or inconsistent with any item on the return, the 
taxpayer will be treated as not demonstrating eligibility for the EIC. 
The taxpayer must follow the instructions for Form 8862 to determine the 
income tax return to which Form 8862 must be attached. If the taxpayer 
attaches Form 8862 to an incorrect tax return, the taxpayer will not be 
relieved of the requirement that the taxpayer attach Form 8862 to the 
correct tax return and will, therefore, not be treated as meeting the 
taxpayer's obligation under paragraph (a) of this section.
    (d) Failure to demonstrate eligibility. If a taxpayer to whom 
paragraph (a) of this section applies fails to satisfy the requirements 
of paragraph (c) of this section with respect to a particular taxable 
year, the IRS can deny the EIC as a mathematical or clerical error under 
section 6213(g)(2)(K).
    (e) Special rule where one spouse denied EIC. The eligibility 
requirements set forth in this section apply to taxpayers filing a joint 
return where one spouse was denied the EIC for a taxable year prior to 
marriage and has not established eligibility as either an unmarried or 
married taxpayer for a subsequent taxable year.
    (f) Effective date. This section applies to returns claiming the EIC 
for taxable years beginning after December 31, 1997, where the EIC was 
denied for a taxable year beginning after December 31, 1996.

[T.D. 8953, 66 FR 33637, June 25, 2001]