The Internal Revenue Service recently issued a warning of 2017 tax refunds delay for certain taxpayers, urging filers to adjust their tax withholding now. We are talking about your 2016 taxes that are due on April 18, 2017.
- First, a new tax law effective next year requires the IRS to hold refunds a few weeks for some early filers who claim the Earned Income Tax Credit and the Additional Child Tax Credit. The IRS has to hold the entire refund, not just the portion associated with those credits, until at least February 15, 2017.
- Second, the rise in identity theft is causing the IRS and state tax authorities to spend additional fraud review time. Additional safeguards will be set in place for the upcoming 2017 filing season.
As a result, there may be a slight delay for some taxpayers in getting their tax refunds. The IRS says most refunds will be issued within the normal time frame of 21 days.
“We’ll be focusing on awareness of this change throughout the fall,” said IRS Commissioner John Koskinen in a statement. “But it’s important for taxpayers to be aware of the change for their planning purposes.”
Cash Is At Stake
Over time, the size of refunds has increased, making tax fraud a bonanza for scammers. In 2016, the IRS distributed more than 102 million tax refunds, with the average amount being more than $2,700. Fraudsters quickly submit fake returns to get a refund before the actual taxpayer turns in their tax documents.
The Justice Department says there are large criminal enterprises at work: stealing Social Security numbers, filing returns and collecting refunds.
The two credits at the center of the IRS efforts are especially promising to thieves.
The earned income tax credit and the additional child tax credit are refundable, so you get back more than you paid in taxes if you qualify.
Refundable tax credits reduce the amount of Federal taxes you owe on a dollar-for-dollar basis. They result in a refund if the amount of taxes owed is less than the credit given.
In the 2013 filing season, scammers filed more than 5 million fake returns in an attempt to steal $30 billion. According to the Justice Department, the IRS was able to halt or recover $24 billion in ill-gotten refunds.
If you have any questions, please feel free to contact JV LAW GROUP today at 714-752-3270 or send us an email info@jvlawgroup.com.
