Beginning in 2017, if a taxpayer claims the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) on their tax return, the IRS must hold their refund until at least February 15. This new law, approved by Congress in 2015, requires the IRS to hold the entire refund — even the portion not associated with EITC or ACTC. This change helps ensure that taxpayers receive the refund they are owed by giving us more time to help detect and prevent fraud.
As in past years, the IRS will begin accepting and processing tax returns once the filing season begins in mid-January. You can file as you normally do. Even though the IRS cannot issue refunds for some early filers until at least February 15, most refunds will still be issued within the normal time-frame: in less than 21 days, after being accepted for processing by the IRS.
It is important to understand this new process before you file your tax returns in 2017. You can help spread the word by telling your friends and family to be careful when they plan any financial obligations based on any specific refund date if they claim these credits. This includes being cautious of loan and preparers fee agreements where repayment is dependent upon the refund. They should be especially aware of any stated repayment dates that are earlier than February 15. They don’t want to incur more costs by committing to any re-payment schedule that requires a full payment before the refund will actually become available.
Taxpayers can check the status of their refund with the Where's My Refund? tool at https://www.irs.gov/refunds or the IRS2Go Mobile App. Where’s My Refund? remains the best way to check the status of a refund after February 15.
Key words: tax return, consumer protection, IRS, Legal Aid of Arkansas