IRS Says to Expect Delays for Tax Refunds
January 05 2017 - 3:40PM
Dow Jones News
By Richard Rubin
Millions of low-income and middle-income taxpayers shouldn't
count on getting their tax refunds until Feb. 27, more than a month
after the tax filing season opens, the IRS said Thursday.
That is the result of a new law passed by Congress that's
designed to cut down on tax fraud.
The IRS must delay paying out refunds on returns that claim the
earned-income tax credit or a child tax credit.
About 15 million households -- or 10% of all individual
income-tax returns -- will be affected by the delay, according to
H&R Block Inc., the tax-preparation company.
Those returns are the most likely to contain identity-theft
fraud, because criminals can claim refunds of $3,000 and up using
those tax breaks and get the money before the real taxpayer even
knows what happened. But they are also the returns of the
low-income taxpayers who file their tax returns early in the year
and rely heavily on those refunds to pay down debt, make big
purchases or replenish savings.
"For many people, this is the biggest check they see all year,"
said IRS Commissioner John Koskinen.
The delay will allow the Internal Revenue Service to match
information on the tax returns with income data on W-2s filed by
employers. Mr. Koskinen didn't have an estimate of how much
additional fraud the IRS might catch. The nonpartisan congressional
Joint Committee on Taxation projected the law would increase
federal revenue by $779 million over a decade.
Over the past few years, the IRS has processed tax refunds
faster and now says 90% of taxpayers get their money within 21
days. That speed and direct deposit of refunds helped shrink the
short-term lending market that bridged the gap for low-income
households waiting for checks in the mail, but it also created
opportunities for fraud.
Mr. Koskinen said taxpayers should file their returns as they
normally would and that the IRS would process them as it receives
them. Then, he said, the agency will release all approved refunds
on Feb. 15, the first date the new law allows.
But Presidents Day on Feb. 20 and processing times for the
federal government and banks mean that refunds may not land in
taxpayers' bank accounts until Feb. 27.
Estimated arrival dates for those refunds won't show up in the
agency's online "Where's My Refund?" tool until after Feb. 15.
The IRS will begin accepting 2016 tax returns on Jan. 23. This
year's deadline -- without allowed extensions -- is April 18, not
April 15, because of a weekend and the Emancipation Day holiday in
Washington, D.C.
Write to Richard Rubin at richard.rubin@wsj.com
(END) Dow Jones Newswires
January 05, 2017 15:25 ET (20:25 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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