IRS crackdown on identity theft will delay millions of tax returns
The U.S. Internal Revenue Service warned taxpayers this week that fiscal 2016 tax returns will arrive later than usual, thanks to new rules intended to crack down on identity theft and tax fraud.
The delays will come as a result of the Protecting Americans from Tax Hikes Act, which mandates that the IRS hold on to refunds claiming an Earned Income Tax Credit or Additional Child Tax Credit until mid-February.
EITC and ACTC affected funds won’t be released by the IRS until Feb. 25, but they won’t begin arriving into taxpayers’ bank accounts until the week of Feb. 27. Officials hope the changes will help to reduce tax fraud via identity theft, providing investigators with more time to detect illegal activities.
H&R Block estimates the tax return delays will affect 15 million households
However, the delays could be problematic for lower- and fixed-income citizens who depend on annual tax returns to make ends meet. As a result, the IRS sent out an advisory noting that financial institutions do not process payments on weekends or holidays, which means President’s Day on Feb. 20 could cause further delays.
Tax preparers at H&R Block estimate that the delays will affect some 15 million total households in America, according to The Wall Street Journal.
Those looking to receive their tax return as quickly as possible should use direct deposit, as mailing a physical check can add several weeks to the delivery time.
On the government side, the fraud crackdown is expected to net an additional $779 million over the next 10 years, a nonpartisan congressional committee concluded.
EITC and ACTC returns have been targeted because they are the most likely to contain fraud through identity theft, netting criminals up to $3,000 from unsuspecting victims — who also are typically among the lowest wage earners.