New Law Expected to Cause Refund Delays in 2017

New Law Expected to Cause Refund Delays in 2017

Beginning in 2017, a new law approved by Congress requires the IRS to hold refunds on tax returns claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (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, 2017.

Purpose of Refund Delay:

Holding the affected refunds is intended to help ensure that taxpayers get the correct refund they are owed by allowing the IRS more time to help detect and prevent fraud. In addition, new identity theft and refund fraud safeguards put in place by both the IRS and the states may mean some tax returns and refunds face additional review

''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."

When IRS Will Begin Accepting and Processing Tax Returns:

The IRS will begin accepting and processing tax returns once the filing season begins. All taxpayers should file as usual, and tax return preparers should submit returns as they normally do.

Even though the IRS cannot issue refunds for some early filers until at least Feb. 15, the IRS reminds taxpayers that most refunds will be issued within the normal time frame, less than 21 days after being accepted for processing by the IRS.

You may use the Where's My Refund? tool on and the IRS2Go phone app.

Stronger Security Filters and Tax Refund Processing:

As the IRS steps up its efforts to combat identity theft and tax refund fraud through its many processing filters, legitimate refund returns sometimes get delayed during the review process. While the IRS is working diligently to stop the issuance of fraudulent refunds, it also remains focused on releasing legitimate refunds as quickly as possible.

Recently, the Internal Revenue Service, state tax agencies and industry partners finalized plans for 2017 to improve identity theft protections for individual and business taxpayers. This comes after making significant inroads this year against fraudulent returns.

Additional safeguards will be set in place for the upcoming 2017 filing season. The IRS and its partners saw a marked improvement in the battle against identity theft in 2016. This is highlighted by the number of new people reporting stolen identities on federal tax returns falling by more than 50 percent, with nearly 275,000 fewer victims compared to a year ago.

"These increased security screenings are invisible to most taxpayers," Koskinen said. "But we want people to be aware we are taking additional steps to protect taxpayers from identity theft, and that sometimes means the real taxpayers face a slight delay in their refunds."