Chapter 5 Disallowance of the EIC If your earned income credit (EIC) for 1997 or 1998 wasdenied (disallowed) or reduced by the IRS, you may need to complete anadditional form to claim the credit for1999. This chapter is for people whose earned income credit(EIC) for 1997 or 1998 was denied or reduced by the IRS. If thisapplies to you and you want to claim the credit for 1999, you may needto complete and attachForm 8862, Information To ClaimEarned Income Credit After Disallowance, to your 1999 return.This chapter explains when you need to attach Form 8862. This chapter also explains the rules for certainpeople who cannot claim the EIC for a period of years because theirEIC was denied or reduced for 1997 or 1998. Form 8862 If your EIC for 1997 or 1998 was denied or reduced for any reasonother than a mathematical or clerical error, you must attach acompleted Form 8862 to your next tax return if you wish to claim theEIC. The date on which your EIC was denied and the date on which youfile your 1999 return affect whether you need to attach Form 8862 toyour 1999 return or to a later return. The following examplesdemonstrate whether Form 8862 is required for 1999 or 2000. Example 1.You claimed the EIC on your 1998 tax return, which you filed inMarch 1999. The IRS questioned the EIC, you were unable to supportyour claim, and, in September 1999, you received a statutory notice ofdeficiency telling you that an adjustment would be assessed unless youfiled a petition in the Tax Court within 90 days. You did not act onthis notice within 90 days. Therefore, your EIC was denied in December1999. If you wish to claim the EIC on your 1999 return, you mustcomplete and attach Form 8862 to your return. Example 2.The facts are the same as in Example 1, except that youreceived the statutory notice of deficiency in February 2000. Becausethe 90-day period referred to in the statutory notice is not over whenyou are ready to file your return for 1999, you should not attach Form8862 to your 1999 return. However, if you wish to claim the EIC forthe year 2000, you must complete and attach Form 8862 to your returnfor that year. Exception for mathematical or clerical errors.keno estrategiaIf your EIC for 1997 or 1998 was denied or reduced as a result of amathematical or clerical error, do not attach Form 8862 to your nexttax return. For example, if your arithmetic is incorrect, the IRS cancorrect it and adjust your return. If you do not provide a correctsocial security number and claim the EIC, the IRS can deny the EIC andadjust your return. These kinds of errors are called mathematical orclerical errors. Omission of Form 8862.If you are required to attach Form8862 to your 1999 tax return, and you claim the EIC without attachinga completed Form 8862, your claim will be automatically denied. Thisis considered a mathematical or clerical error. You will not bepermitted to claim the EIC without a completed Form 8862. Poland HotelsAre You Prohibited From Claiming the EIC for a Period ofYears? If your EIC for 1997 or 1998 was denied and it was determined thatyour error was due to reckless or intentional disregard of the EICrules, then you cannot claim the EIC for the next 2 years. If yourerror was due to fraud, then you cannot claim the EIC for thenext 10 years. The date on which your EIC was denied and the date onwhich you file your 1999 return affect the years for which you areprohibited from claiming the EIC. The following examples demonstratewhich years you are prohibited from claiming the EIC. Example 3.You claimed the EIC on your 1998 tax return, which you filed inMarch 1999. In October 1999, the IRS denied your claim and determinedthat your error was due to reckless or intentional disregard of theEIC rules. You cannot claim the EIC for tax year 1999 or 2000. If youwish to claim the EIC on your return for 2001, you must complete andattach Form 8862 to your return for 2001. Example 4.The facts are the same as in Example 3,five star hotel in Rothenburg except that theIRS did not disallow your 1998 EIC until after you filed your 1999return. You cannot claim the EIC for tax year 2000 or 2001. If youwish to claim the EIC on your return for 2002, you must complete andattach Form 8862 to your return for 2002. Example 5.You claimed the EIC on your 1998 tax return, which you filed inFebruary 1999. In December 1999, the IRS denied your claim anddetermined that your error was due to fraud. You cannot claim the EICfor tax years 1999 through 2008. If you wish to claim the EIC on yourreturn for 2009, you must complete and attach Form 8862 to your returnfor 2009.