IRS Keeps Tax Break for Abducted Kids

ByABC News

W A S H I N G T O N,  Sept. 26, 2000 -- Under pressure from lawmakers, the Internal Revenue Service has reversed a decision disqualifying parents from taking tax deductions for their children who have been kidnapped.

The change, in the form of an advisory opinion, means any parent whose child is abducted by a person outside the family may take the same deduction as any other parent with a dependent child: $2,800.

The House is expected to approve the “Missing Children Tax Fairness Act of 2000” today, which would put the IRS opinion into law. The sponsor, Rep. Jim Ramstad, R-Minn., said passing the measure is important to ensure the IRS keeps the new policy.

“We need to make sure the IRS won’t flip-flop again,” Ramstad said. “People whose children are abducted suffer enough. They shouldn’t have the IRS compound their suffering with more emotional and financial burden.”

Boy Abducted, Family Taxed Ramstad’s bill would help people like Patty Wetterling of St. Joseph, Minn., whose 11-year-old son Jacob was abducted at gunpoint in 1989 by a masked man as the boy rode his bike home from a video store. Jacob has never been found.

Wetterling said she was demoralized when her accountant told her she could not claim Jacob as a dependent after the first year, even though she maintained his room and spent thousands of dollars searching for him.

“Every searching parent is operating under the hope that their child will someday be found,” said Wetterling, who founded the Jacob Wetterling Foundation, which aids families of missing children.

“And it’s almost like the IRS telling you your child doesn’t exist anymore,” she said. “It happens too suddenly, too short after their disappearance. It’s emotionally devastating.”

IRS Changes Mind Wetterling never questioned the policy, but another parent did. In an advisory opinion made public last month, an IRS lawyer said a deduction could be taken only in the year the child was seized. Last Friday, a more senior IRS lawyer, Lewis Fernandez, ruled parents could continue to take the deduction as long as the child is missing or until the year after the child’s 18th birthday.

IRS spokesman Don Roberts said the move wasn’t related to Ramstad’s bill.

Roberts noted that in the original advisory opinion, IRS lawyer George Baker conceded “the issue is not free from doubt.” The uncertainty prompted the agency to take another look at it, he said.

Under IRS rules, a parent must pay for half the cost of a child’s support to take a deduction. Baker concluded that expenses for maintaining a room and searching for a kidnapped child do not constitute “support.” Fernandez disagreed.

Ramstad said his bill preserves the deduction on the assumption parents continue spending money in the child’s behalf, although there is no requirement that they do so.

In the Senate, Sen. John Breaux, D-La., introduced similar legislation Monday.

About 32,000 adults and children were abducted in the United States last year, records of the National Center for Missing and Exploited Children in Alexandria, Va., show.

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