Internal Revenue Service failed to pay refunds for adoption credits on tax returns, families say

By Rosemary Parker

April 14, 2011 / 

Adoptive families across the country are reeling with the discovery that their long-awaited federal income tax refunds mysteriously do not include the portion — often thousands of dollars — claimed under the adoption tax credit.

Social networking sites are abuzz as parents discover that their electronic refund deposits or checks in the mail are falling short — very short — with no explanation why.

"I was like, 'What, it's everybody? Not just me?'" said Laura Gordon of Colon, whose refund was $6,800 less than expected.

Charges for legal fees, court costs, medical costs, counseling and adoption agency fees can be staggering.

At Bethany Christian Services in Kalamazoo, for instance, domestic infant adoptions cost $19,800 and international adoptions can be as much as $45,000, said Brad Keller, director of the agency's Kalamazoo branch.

And it's all due up front.

As Monday's tax deadline approaches, most adoptive families have long since sent in their tax filings, in anticipation of a hefty tax credit refund — up to $13,171 this year — that helps them replenish depleted savings accounts or pay off the credit card debt.

"The home-study people from the agency said, 'You will get this (tax refund),' our lawyer said, 'You will get this,' even the woman who did our taxes" assured them, Gordon said.

"We've begged, borrowed, whatever we could," Gordon said. "We drained everything we had to pay for the adoption," which was finalized in November.

"We need that (refund) money to get caught up," he added.

Show me the money

This is the first year that parents may file for a credit in the entire amount of their expenses, up to the $13,171 cap, for adoptions completed in 2010, said Mary Boo, assistant director of the North American Council on Adoptable Children in St. Paul, Minn.

They may also file for remaining expenses for children adopted in earlier years, when the refund credit could not exceed taxes paid. Adoptive parents of special needs children are allowed the maximum tax credit regardless of their adoption expenses, Boo said.

Her advocacy group has heard from hundreds of families across the country who, like Gordon, learned of a problem only when their refund was unexpectedly small.

"Almost all of the parents we heard from had not yet received their adoption tax credit," Boo said, " although most have received their regular refund."

In many cases, there has been no communication from the IRS explaining the discrepancy, she said.

Luis D. Garcia, Internal Revenue Service spokesman for Michigan, said the IRS is simply being very careful in its review of the adoption credit claims.

There is "no systemic issue, no snag or snafu with processing of those returns," Garcia said. "Many of these returns are missing documents or contain errors."

Gordon said with no explanation of her family's return shortfall, she checked the Internal Revenue Service website, then called the IRS.

"They said needed certification of finalization of adoption from the courthouse," Gordon said. "I had sent an original," but then sent another. "Then they said they needed records of all lawyers' fees, and I sent all that again, too. They are still asking for stuff we already sent."

"They've gotten duplicates now, but they still keep delaying, delaying. They're making it sound as if we may never get it."

That's Travis Ericksen's fear.

"It's causing a lot of anxiety for me," the Kalamazoo father said. The Ericksens are counting on this year's refund to help pay for costs associated with the adoption of a second child this year, he said. The adoption tax credit program is set to expire at the end of 2011, he said, and he worries about retroactive changes that may affect this year's refunds.

"I'm especially concerned that with the federal government almost coming to a shutdown, with them trying to make massive cuts," he said. " I'm afraid that this is an easy place to cut from, since it's not written into law that it will be extended beyond this year."

The Ericksens used a certified public accountant to prepare their claim and, like the Gordons, were careful to follow every instruction to the letter, he said. "We used to do our taxes on our own, but we wanted to make sure every 'i' was dotted, every 't' crossed. Now everyone I know of is in the same boat. I've been searching online asking, 'Has anyone gotten (the adoption tax credit portion of) their refund yet?' No one has."

A lot of extra work

Garcia said parents can be sure that "if you are entitled to that money, you will get that money," and added that since processing of the the itemized claims did not begin until Feb. 18, the IRS is still within an eight-week response window. People could begin receiving the adoption tax credit portion of their refund any day, he said.

"We are absolutely not slowing anything down artificially, there is no nefarious plan to hold on to the money," he said. "We're just being very careful because it's a big chunk of money."

Allison Shockley of Mattawan said she just received a letter requesting a written statement describing each expense and copies of canceled checks or receipts for each item claimed, she said, even though previous years' partial refunds for the same children were processed electronically, without a hitch.

"This is the third adoption credit I've filed for and for 6 out of last 7 years I've never had an issue, " she said.


What Garcia views as caution and due diligence on the part of the IRS, many adoptive parents view as unfair and discriminatory.

"I just feel like it's really unfair. We followed the rules for claiming this credit, sent in all of the proper documentation, we had to wait a year to even claim it," said Beth Ericksen. "It's really unfair for them to hold it up now when we have met all their requirements, followed all of their rules, without any warning or explaination — not even an email from IRS."

"I find it ironic how adoptive parents go through a lot of scrutiny and ultimately the courts decide based on all the evidence that we are trustworthy enough to raise and financially provide for children, but the IRS doesn't trust us or our Certified Public Accountants to fill out our taxes correctly," Travis Ericksen posted on his Facebook page this week. "If the courts trust us why doesn't the IRS trust us? It's insulting!"

In anticipation of a lengthy wait while she complies with additional instructions, "I'm thankful I borrowed money from my dad, " Shockley said. "I had to call and say, 'Sorry.'" Thankfully, we're not paying interest. "


Poor, poor discriminated against AP's...

Sometimes, I just don't know where to begin.... so, I'll start with the complaints made by narrow-minded AP's, focused only on their plight and their situation.

"I just feel like it's really unfair. We followed the rules for claiming this credit, sent in all of the proper documentation, we had to wait a year to even claim it," said Beth Ericksen. "It's really unfair for them to hold it up now when we have met all their requirements, followed all of their rules, without any warning or explanation — not even an email from IRS."

"I find it ironic how adoptive parents go through a lot of scrutiny and ultimately the courts decide based on all the evidence that we are trustworthy enough to raise and financially provide for children, but the IRS doesn't trust us or our Certified Public Accountants to fill out our taxes correctly," Travis Ericksen posted on his Facebook page this week. "If the courts trust us why doesn't the IRS trust us? It's insulting!"

It's often assumed the AP is the one type of parent who will dedicate more time, more money to the proper raising of a child.  This theory is confirmed by "study findings" pitched by those promoting tax benefits.

A recent study has found that, on average, adoptive parents spend more money on their children and carve out more time for parent-child activities like reading, talking, and eating together than do their biological counterparts. The findings are being used to challenge opponents of gay and lesbian adoption.

[From:  What's New in Adoption, 2008 ]

That same article points out the real reason behind the many tax benefits/incentives given to adults who choose to adopt.

In 2007, 19,292 children were adopted from abroad, a 15 percent decline from the previous year.

"Hardships", like closed adoption programs, slowed adoption process, limiting quotas (all initiated by sending countries, not the USA, BTW) have made adoption from foster care not the bad-deal so many assume it is.

However, the increasing number in domestic adoption, transracial adoption, and number of adoptive families in America has less to do with helping the older adoptable child in America's foster care system, and much more to do with an improved infant adoption system... a system that prefers to break the mother-child bond, so the more financially desirable paying PAP can get what's really desired, so the government doesn't have to assist the original parent-infant relationship.

Meetings between domestic adopters and birthparents are increasingly common, especially in the Midwest and Western states. A recent study found that 80% of agencies offered “fully disclosed” adoptions, in which both parties meet, up from only 36 percent 15 years ago.

Each year, 25,000 or more U.S.-born infants are adopted domestically, and increased birthparent interest in open adoption is being reported by a number of agencies. By early 2007, 22 states had made open adoption agreements legally enforceable.

Adoption disruption insurance policies resurfaced on the market in 2005, making it possible for prospective adoptive parents to recover their expenses in cases where birthparents decide not to place a child for adoption. The policies are available only for adoptions of U.S. infants, and parents must use an approved agency or attorney. For more information, consult

Adoption from foster care

More people are adopting from foster care. Since the Adoption and Safe Families Act (ASFA) was enacted, in 1997, to speed the adoption of kids in foster care, the number of such adoptions grew to 51,323 in 2005, from 28,000 in 1996. While 114,000 children were waiting to be adopted at the end of 2005, the total number of children in foster care has declined, to 513,000 in 2005, from 567,000 in 1999.

Fears that the rising number of adoptions from foster care would result in more disruptions appear unfounded. A 2006 study of 16,000 adoptive placements over a six-year period in Illinois found that the risk of disruption was 11 percent lower for placements occurring after the passage of ASFA.

Another article, The Adoption Tax Credit: An Ethical Dilemma (2007), puts much of this confusing jibber-jab in much clearer, easy to read English, proving today's well-informed AP's is not given the credit or the title one deserves when facts get overlooked.

Since 1997, many adoptive families have been able to use the federal adoption tax credit. The credit, however, is due to end in 2010 and some legislators are already proposing to extend the credit indefinitely. New evidence suggests that we must not renew the credit without first ensuring that it furthers the goal of promoting and supporting adoptions from foster care.

What the Numbers Tell Us

A recent Child Trends research brief1 uses 1999–2005 data from the U.S. Treasury Department to determine who most benefits from the credit. In his report summary, author Rob Geen reveals that:

  •  “The vast majority of adoption tax credit recipients completed private or foreign adoptions rather than adoptions from foster care.”
  •  “The tax credit disproportionately supports higher-income families.”
  •  “The tax credit primarily supports the adoption of younger children.”
  •  “Nearly all foreign adoptions were supported by the…tax credit, but only one in four foster care adoptions were.”

Children adopted from foster care in 2004 represented just 18 percent of children supported by the credit and 17 percent of money spent. In 2005, about two-thirds of the money spent on the tax credit went to tax filers whose annual incomes surpassed $74,999. Nearly 90 percent of filers with incomes above $100,000 adopted internationally or privately, and 71 percent of all families adopted children under age five. Only about 10 percent of higher-income families adopted from foster care, and very few adopted older children.

Parents who adopted foreign children used the tax credit at the highest rate. State Department data indicate that 22,884 children were adopted internationally in 2004. Tax returns suggest that filers claimed 2004 adoption tax credit benefits for 23,296 foreign children.2 Roughly 52,000 children were adopted from foster care in 2004, but taxpayers claimed a credit for just 12,432 of those adoptees—less than a quarter of the children adopted from foster care that year.

In NACAC’s experience, the low rate of tax credit use by those who adopt children with special needs is linked to two main factors. First, many of these adoptive parents simply do not earn enough taxable income or generate enough tax liability to take advantage of a tax credit. Others who adopt from foster care lack accurate information about the credit and thus never use it.

Now, do we really need to go into the ways in which home-study/court approved AP's have HURT and COST the state/USA, in terms of cost and repair needed to undo the damage of a poor adoption plan?  [Why, the failures seen with home-visits, paid Adoption Subsidies, and cases where adopters crate their kids, for disciplining purposes, is enough to keep me busy for hours (of unpaid research and service!)]

I'd be more than happy to showcase the wrongs in lappy-happy Adoptionland... because I really think the whining or "poor discriminated against me, the savior AP" crap needs to stop already. 

No one is forcing people to spend tens of thousands of dollars adults don't have to adopt a foreign child.  (REALLY!)  If you can't afford the price, don't pay the required fee; stop looking for the government hand-out... it's really in poor taste.  Really.

WHAT did we do???

We, like many other AP's did NOT have the money up-front to adopt: we ALL were/are depending on the tax refunds, work related gifts, borrowing from family and the bank, to finance these adoptions...  that's true.  And when I look at it on print, it makes me shudder to think what all I did to scrounge enough money together to adopt each child.  I will tell you the truth, it cost $140,000. 

I personally believe it is a challenge people take to somehow say, LOOK AT ME!  See what I can do?  Sounds like Stewart on MADtv, "LOOK WHAT I CAN DO!"  and about as selfish and immature.  I wonder if any of these PAP's could honestly step back and see how foolish it is to depend on a tax refund to get them started again on another adoption...  or just get their heads above water financially?

A lot of people who adopt claim to be Christians; myself included.  As I read here, and step back to truly see how it looks to others; I'm wondering what God thinks of this type of behavior?  I know I didn't tithe 10% of all the money I came up with... so how do we Christians expect God to bless our endeavors?  The abuse and neglect; the disruptions and false hope;  putting thousands of dollars into adoptions that never even materialize must make God pretty sad.



Thank you for not bashing me for my outburst, because after all these decades, I really see something very wrong and twisted in what is being passed as "Christian" adoptions. 

<trying not to barf on my brand new keyboard, thanks to my less than expected tax refund>

You know what?  I don't even mind the tax credit stuff. How could I mind it if good people, doing good parenting get a much deserved tax-break (or return) at the end of the fiscal year?  Hard workers deserve to keep the money they work for and earn!  [Why SHOULD it go to the government?  So corrupt politicians have more money to waste?]

I have four kids, if not for our tax refunds and tax breaks, we'd be down shit's creek without a paddle paying off bills like hockey equipment and music lessons, and new appliances because the old ones don't work after YEARS of hard service.

My issue is not about tax benefits or credits given to parents.

My issue is about the tunnel-vision so many PAP and AP's have these days. 

APs, especially, need a good sober, wide eye look at the way in which other AP's and adoption facilitators/adoption service providers fleece the system. 

AP's/PAPs also need to realize ICA is a luxury that is not necessary because it serves very little good humanitarian purpose.  [This is news adopters 20-10 years ago did not know, because it was not on the news, or on the Internet like it is these days.]

If Americans want to help the suffering child, abandoned by scum parents, or hurt by those who don't deserve the title and benefits that go with the word "parent", or damaged by a care-system that just can't seem to get things right, then don't look across the pond, or globe, or most recent vogue exotic spot.


Start there, and if the wait is too long, do something like Volunteering at your local hospital, your local women's shelter... ANYWHERE, just to make that long terrible wait not seem so wasted, so horrible, and so bloody long.  Americans need to help save America, and one way is to keep American money in local circulation.

Good grief!  Maybe if more helped their locals, less ICA adoptions would be needed... or have we gotten to the point where the import/export programs associated with child trade adoption now offer too many perks and temptations that the savvy business man person entity is able to convince (mislead) followers of God's Laws to overlook morals and ethics, just so quotas, numbers, and revenues can be raised?

I just don't see how PAL, as it is being used these days, can benefit those who are getting caught-up in the industry-produced fog.

At this point, I think the good AP should be renamed. 

Let's call the good parent-replacement a Surrogate. 

And let there be a call for more local surrogate parents to help assist parents parent the children that need better care.  Let us teach others how to get off the adoption high-horse, so they may see true altruism as we adoptees have yet to see it in Adoptionland.  Let this be done so a greater good CAN be done, for all touched by the benefits of a surrogate parent service.  [See how twisted family services have become since adoption/surrogacy/infant placement has become?]

<shaking head at the profound insanity>

I need a drink, and a walk to clear my head.

Pound Pup Legacy