Earlier this year, the Internal Revenue Service announced it is beginning protocols for processing tax returns using the Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC). The IRS is sharing this information to help taxpayers, tax preparers, and other tax professionals prepare for the opening weeks of the 2017 filing season. The IRS is attempting to ensure taxpayers receive a correct and accurate refund.
The Protecting Americans from Tax Hikes Act of 2015 (PATH Act) was enacted in December of 2015, which made several changes to the tax law affecting taxpayers with families. This change begins Jan. 1, 2017, and therefore may affect some returns filed early in 2017.
One provision, § 201, of this new law mandates that no credit or refund for an overpayment for a taxable year will be made to a taxpayer before February 15th if the taxpayer claimed the Earned Income Tax Credit or Additional Child Tax Credit on his or her return.
Why the delays? The IRS must hold the refunds on EITC and ACTC-related returns until February 15th to comply with PATH. The IRS may not release any part of the refund unrelated to the EITC and ACTC, it must hold the entire refund. A primary purpose of this provision in PATH is to permit the IRS additional time to verify taxpayer withholdings and identify instances of identity theft and tax refund fraud.
Taxpayers should file and submit returns as usual. The IRS will begin accepting and processing tax returns once the filing season begins. The IRS still expects to issue most refunds in less than 21 days, though IRS will hold refunds for EITC and ACTC-related tax returns filed early in 2017 until Feb. 15 and begin issuing them thereafter.
In order to ensure that taxpayers make a smooth transition in light of this important law change, contact THE TAX EXPERTS at the Thorgood Law Firm www.thorgoodlaw.com. For a FREE consultation, call 212-490-0704.
