n-03-28.pdf

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Part III - Administrative, Procedural, and Miscellaneous

Earned Income Credit and Tribal Child Placements

Notice 2003-28

This notice clarifies the application of the earned income credit for a taxpayer
caring for a child placed with the taxpayer by an Indian tribal government (ITG) or an
organization an ITG has authorized to place Indian children. Section 32(a)(1) provides
for an earned income credit in the case of an eligible individual. Section 32(c)(1)(A)(i)
defines an eligible individual as an individual who has a qualifying child for the taxable
year. Section 32(c)(3) defines a qualifying child as one who satisfies a relationship test,
a residency test, and an age test. Under § 32(c)(3)(B)(i)(III), an eligible foster child
satisfies the relationship test. Pursuant to § 32(c)(3)(B)(iii), for taxable years beginning
after December 31, 1999, an eligible foster child includes a child placed with the
taxpayer by an authorized placement agency whom the taxpayer cares for as the
taxpayer’s own child (and, for taxable years beginning before January 1, 2002, who has
the same principal place of abode as the taxpayer for the taxpayer’s entire taxable
year). For purposes of § 32(c)(3)(B)(iii), an authorized placement agency includes an
ITG and also includes an organization an ITG has authorized to place Indian children
(Indian tribal organization). Thus, for taxable years beginning after December 31, 1999,
a child placed with a taxpayer by an ITG or an Indian tribal organization qualifies as an
eligible foster child, provided the taxpayer cares for the child as his or her own, and, for
taxable years beginning before January 1, 2002, the child has the same principal place
of abode as the taxpayer for the taxpayer’s entire taxable year.

The principal author of this notice is Sylvia F. Hunt of the Office of the Division
Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). For further
information regarding this notice contact Ms. Hunt at (202) 622-6080 (not a toll-free
call).