Prepare Now for Future Refund Delays – IRS now required to delay refunds to many taxpayers
As part of recent tax legislation, the IRS is now mandated to delay sending out some refunds to taxpayers beginning with 2016 tax returns. If impacted, you will need to plan for this delay.
Topline: If next year’s tax return claims an Earned Income Tax Credit or the Additional Child Tax Credit your refund will be held by the IRS until February 15th.
The delay in sending out tax refunds is mandated by recent tax law legislation because of the proliferation of identity theft and tax fraud. This extra time will be used by the IRS to help prevent revenue loss from early tax return filings claiming invalid tax refunds. Those most impacted by this change are early tax return filers. While the IRS plans future correspondence to alert taxpayers to this change, here are some things to note.
- Entire refund. If your tax return claims either of these credits, your entire refund will be held until February 15th.
- Do not delay. If you typically file early, do not delay filing your tax return because of this rule change. Tax returns can still be processed. Only the refund payment is being delayed.
- The bottleneck. Filing early can help you avoid the bottleneck of tax refund processing. On February 15thyou will want to be at the front of the line to receive your money.
- Plan accordingly. If you historically plan on receiving and using an early refund, you will now need to plan for this delay.