IRS: Many Taxpayers Should Expect Delayed Refunds in 2017

For many taxpayers, the New Year begins with celebrations, resolutions, and tax refunds.  This year, however, the IRS and many states are putting a damper on the celebration by advising taxpayers to sit tight when it comes to those tax refunds expected in early 2017.

A newly implemented law requires the IRS to hold refunds until mid-February for people claiming the Earned Income Tax Credit and/or the Additional Child Tax Credit in 2017. Additionally, the IRS and most states have established fraud and identity theft safeguards which will result in additional review of more tax returns in the coming tax season.

From the IRS:

Beginning in 2017, a new law approved by Congress requires the IRS to hold refunds on tax returns claiming the EITC or the ACTC until mid-February. The IRS must hold the entire refund – even the portion not associated with the EITC and ACTC — until at least Feb. 15. This change helps ensure that taxpayers get the refund they are owed by giving the agency more time to help detect and prevent fraud.

”This is an important change as some of these taxpayers are used to getting an early refund,” said IRS Commissioner John Koskinen. “We want people to be aware of the change for their planning purposes during the holidays. We don’t want anyone caught by surprise if they get their refund a few weeks later than in previous years.”

If your tax return did not include the Earned Income Tax Credit or Additional Child Tax Credit, screening for identity theft and fraud may result in a delay, even for taxpayers who are doing everything right.  The stronger security filters are in place to reduce the number of fraudulent refunds issued, which could cause innocent taxpayers to get caught up and have their refunds delayed. This applies to both state and federal refunds, business and personal returns.

If you are an early filer expecting a refund (or know someone who is), plan accordingly!