New Federal Tax Law – PATH Act

Changes to the way the IRS processes tax returns involving the Earned Income Tax Credit and Additional Child Tax Credit begin Jan. 1, 2017, and may affect some returns filed early in 2017.

How might these changes affect you?

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

What should you do?*

  • You should file as you normally do.
  • The IRS will begin accepting and processing electronic tax returns on January 23rd. That will not change.
  • 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.

Why is this happening?

  • This action is driven by the Protecting Americans from Tax Hikes Act of 2015 (PATH Act) that was enacted Dec. 18, 2015, and made several changes to the tax law that are supposed to benefit taxpayers and their families. Section 201 of this new law mandates that no credit or refund for an overpayment for a taxable year shall be made to a taxpayer before Feb. 15 if the taxpayer claimed the Earned Income Tax Credit or Additional Child Tax Credit on the return. This hold by the IRS allows the IRS additional time to help prevent revenue lost due to identity theft and refund fraud related to fabricated wages and withholdings.
*Ask about our Refund Advance, 0% Interest loan, for refund advances of up to $1200.

[Adapted from https://www.irs.gov/for-tax-pros/new-federal-tax-law-may-affect-some-refunds-filed-in-early-2017]; Updated 1/12/2017

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