In December of 2015, the Protecting Americans from Tax Hikes Act was enacted. Known as the PATH Act, it requires the IRS to withhold tax refunds for any tax return that includes the earned income credit or the refundable portion of the child tax credit to February 15, 2017.
The delay in issuing refunds is intended to reduce fraud and improper payments. It will also allow the IRS sufficient time to conduct additional compliance checks and to review the income earned by the taxpayer. Even if only a portion of the refund stems from the earned income tax credit or the refundable portion of the child tax credit, the IRS is required by law to withhold the entire refund until it is certain that the refund is proper.
IRS senior tax analyst Don Dill recently stated his belief that the delay in issuing refunds will cause “quite a queue” for certain taxpayers. As taxpayers who pay their fair share, we feel that a small delay in issuing refunds to reduce fraud or improper payments is a reasonable price to pay.
To the extent that fraudsters or scammers receive improper refunds, all of us are hurt insofar as we have to pay for those improper refunds. Further, most taxpayers can adjust their withholding so that they enjoy the use of their own money during the year with a larger paycheck and getting a smaller refund or no refund at all at the end of each year.
We actually prefer this approach because we get to use our own money during the year rather than getting large refunds at the end of the year. Otherwise you are essentially making an interest-free loan to the government by allowing them to use your money during the year. What do you think?
Do you owe the IRS back taxes or are you currently under audit? Contact Chicago tax lawyer Patrick T. Sheehan and Associates today for a consultation.