IRS Delaying Tax Refunds This Year, More Than 40 Million American Families Effected
The IRS is delaying tax refunds for low-income and middle class families this year due to plans by the federal agency to enhance identity fraud and theft reviews. More than 40 million low-income and working class American families will be impacted by the new IRS policy.
American families who are claiming the earned income tax credit and the additional child tax credit should expect to be effected by the IRS tax refund delay. Millions of Americans claim both tax deductions on their returns every year.
#IRS Clamps Down on #Tax Credits Delaying Some #Refunds via @SpencerTaxes https://t.co/xu8OweTk5F pic.twitter.com/Sejaanf3qS
— TaxBuzz.com (@taxbuzzonline) November 18, 2016
Americans can begin filing tax returns on January 23. The IRS tax refunds delay is expected to cause poor and working class families to wait until at least February 15 to get a check, the Chicago Tribune reports. IRS Commissioner John Koskinen said processing times may delay tax refunds from being issued until the end of February.
“For most of these people it’s the biggest check they are going to get all year,” Commissioner Koskinen said. “We are sensitive to that.”
During the IRS tax refunds delay the federal agency will be screening returns for potential fraud. The IRS estimates that identity thieves garnered about $3.1 billion in fraudulent tax refunds in 2014, MSN reports. Approximately $5.8 billion in fraudulent tax refunds may have been paid out in 2013. The IRS claims it blocked almost $47 billion in fraudulent refunds over that same two year period.
In 2014, approximately 29 million American families garnered in excess of $72 billion in earned income tax credits. The earned income tax credit (EITC) program is one of the largest anti-poverty programs in the United States. The IRS maintains the agency had been faced with billions of dollars’ worth of improper payments every year – including underpayments.
Half of the Americans who file their taxes with H&R Block reportedly claim the earned income tax credit and child tax credit on their returns. H&R Block CEO Bill Cobb said the tax preparation company is offering interest-free loans to customers who are impacted by the delay. Similar on-the-spot tax preparation businesses may also be following suit to court customers impacted by the IRS tax refund delay.
“The EITC is a pro-work success,” Center on Budget and Policy Priorities Director Chuck Marr, said. “It encourages work, it rewards work, and it has long enjoyed bipartisan support for those reasons.”
Many, if not most, middle class American families with children, are reportedly eligible to receive the $1,000-per-child tax credit. The earned income tax credit is reserved solely for the working poor.
The IRS predicts it will be processing more than 153 million tax returns in 2017. More than 70 percent of the tax filers are expected to receive some type of tax refund.
The IRS began partnering with state tax agencies and tax preparation services to combat identity theft. The partnership reportedly fostered information sharing which is then used to combat identity theft. IRS officials feel they are making progress in thwarting identity theft and fraud. In 2016 the number of stolen identities found via tax refund reviews reportedly dropped by 50 percent.
“We’re talking about international organized crime syndicates,” Koskinen said. The IRS official also noted the criminals are becoming far more sophisticated.
In 2016, about 1.2 million legitimate tax refunds totaling about $9 billion, were delayed more than 30 days due to fraud reviews, according to a report by the National Taxpayer Advocate group.
What do you think about the IRS delaying tax refunds?
[Featured Image by Sergey Nivens/Shutterstock]
