The IRS has announced their initial plans for processing tax returns involving the Earned Income Tax Credit and Additional Child Tax Credit during the opening weeks of the 2017 filing season. This action is driven by the Protection Americans from the Tax Hikes Act of 2015 (PATH Act) that was enacted Dec. 18, 2015. It made several changes to the tax law to benefit taxpayers and their families. Section 201 states that no credit or refund for an overpayment for a taxable year shall be made to a taxpayer before Feb. 15th if the tax payer claimed the Earned Income Tax Credit or Additional Child Tax Credit on their return.

The change began on Jan. 1, 2017, and may affect some returns filed early in 2017. Additionally,

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

For more information about this law visit the IRS’s website.  For actual help, get in touch with us.