Tax department warns unpaid caregiver credit in S.51 would be hard to verify

At a House Ways & Means Committee meeting on Tuesday, May 13, Deputy Commissioner Rebecca Samoroff of the Vermont Department of Taxes told committee members that the unpaid caregiver tax credit in S.51 would be difficult for the department to verify and administer.

Samoroff, who testified for the department, said the proposal relies heavily on claimant attestations for eligibility and that “it's a really complex idea to administer as a tax program.” She warned that many eligibility elements — including proving the absence of compensation and documenting that a caregiver spends 20 hours a week on care — lack a paper trail the department could use to validate claims.

The nut graf: lawmakers considering S.51 are weighing a refundable state credit aimed at unpaid family caregivers against practical limits of tax administration, department staff capacity and fraud-prevention tools; Samoroff recommended that some elements of the policy might be better delivered through human services programs than through the tax system.

Samoroff explained operational concerns in more detail. “It relies really heavily on ... the attestation, where most of ... the key information on that attestation wouldn't be something that we could verify at the department,” she said. She added that “the amount of time spent on care has to be 20 hours a week, to be eligible for this credit,” and called that requirement “completely impossible for us to verify.”

Samoroff also raised privacy and exploitation risks if staff were required to probe the medical or personal details of care recipients. “It's not the kinda ... bright line definitions that we want our team members ... feeling a responsibility to enforce,” she said, describing reluctance to have examiners seek medical details about third parties in order to validate a claim.

The department singled out refundable credits as a particular fraud-risk area. “It's like a very generous refundable credit ... those characteristics alone make it really attractive for fraudsters,” Samoroff said, noting the department devotes substantial effort to managing fraud in refundable-credit programs.

A committee member asked Samoroff to compare the proposed unpaid caregiver credit with the federal Child and Dependent Care Credit, which the department administers partly by relying on federal records. Samoroff said the federal program provides a “great wealth of federal data, to help validate” claims and that the state has used that information for validation work. One committee member also recalled needing the tax identification number of care providers when claiming the federal credit: “I needed [the] tax ID number of the organization that was providing the care,” the member said.

Samoroff told the committee she was generally supportive of the House version of the credit package relative to the Senate proposal under consideration in conference: “I would say as a member of the administration, we're pretty enthusiastic about the house's version of this bill,” she said, adding that certain components of that version create clearer paper trails for verification.

No formal action or vote was taken during the session on S.51; the discussion was presented as testimony for committee members and intended to inform further work in conference and by staff. Committee members closed the meeting without directing staff to adopt a specific administrative approach during that session.

The committee also discussed its schedule for reviewing routine reports in the coming biennium but did not take formal steps tied to the caregiver credit during the meeting.