The Path Act May Affect Some Refunds Filed in Early 2017;


The Internal Revenue Service has announced an initial plan for processing tax returns starting this coming tax Season.  Tax payer claiming a refund that involves the Earned Income Tax Credit and Additional Child Tax Credit would not be receiving a refund until February 15, 2017.  This action is driven to Protect Americans from the Tax Hikes Act of 2015 (PATH Act) that was enacted Dec. 18, 2015.  

This new changes begin Jan. 1, 2017, and may only affect returns filed early in 2017 if they qualify for the Earn Income Tax Credit or the Additional Child Tax Credit.  Here are some of the reasons that the IRS would be holding the refunds:  

  • To comply with the law, the IRS will hold the refunds on EITC and ACTC-related returns until Feb. 15.

  • This allows additional time to help prevent revenue lost due to identity theft and refund fraud related to fabricated wages and withholdings.

  • The IRS will hold the entire refund. Under the new law, the IRS cannot release the part of the refund that is not associated with the EITC and ACTC.

  • Taxpayers should file as they normally do, and tax return preparers should also submit returns as they normally do.

  • The IRS will begin accepting and processing tax returns once the filing season begins, as we do every year. That will not change.

  • The IRS still expects to issue most refunds in less than 21 days, though IRS will hold refunds for EITC and ACTC-related tax returns filed early in 2017 until Feb. 15 and then begin issuing them.

    This is one more step the IRS is taking to ensure taxpayers receive the refund they are owed. The IRS plans to work closely with stakeholders and IRS partners to help the public understand this process before they file their tax returns and ensure a smooth transition for this important law change.  We would continue to keep all our clients up to date with all new information leading to the upcoming Tax Season.   We are also working with our Bank Product provider to help those clients that are in need to get a cash advance.  Please inquire about this services with us.