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Tax season 2017: a hurry up and wait proposition

On Behalf of | Jan 16, 2017 | Tax Crimes |

A delayed federal tax filing date of April 18 may not lead to a much longer wait in receiving your tax return. However, millions of taxpayers who file on day one of the tax-filing season, January 23, may not see their refunds as soon as they would like. What likely represents the biggest check they’ll receive all year could be delayed.

In their continuing fight against identity theft and fraud, the Internal Revenue Service will delay tax refunds for more than 40 million low-income families. Most of those affected include families who claim the earned income and child tax credits.

Billions Of Dollars At Stake

Considered the federal government’s largest anti-poverty program, more than $72 million in earned income credits (EIC) were disbursed to 29 million lower income families in 2014. However, that number includes billions in overpayments, underpayments and fraudulent payments. That year, the agency estimates that $3.1 billion in fraudulent tax returns were issued to identity thieves.

Most families are eligible for the standard $1,000-a-child tax credit. Low-income families can claim an additional tax credit if they don’t owe enough in federal income tax to claim the full amount. The additional credit comes to them in the form of a refund.

Tax Fraud And Identity Theft: A Growth Industry

Waiting until the latter part of February provides more time for screening of returns to uncover identity theft. Tax fraud has become an industry considered by many to be an international organized crime syndicate. Their “revenues” reach multi-billion dollar levels. Their growing sophistication necessitates increased aggressiveness by the IRS in taking a closer look at returns.

Even if a refund is legitimate, the National Taxpayer Advocate, an agency watchdog, claims that stepped-up screening will cause delays in 2017. Last year, approximately 1.2 million legitimate refunds valued at $9 billion were delayed. Many taxpayers were forced to prove their identity to the agency before they could receive their refunds, a process that lasted weeks or months.

Simply stated, good things will come to those who wait. However, the wait will be a little longer.