Under recently enacted federal law, taxpayers who file for the earned income tax credit (EITC) or the Additional Child Tax Credit (ACTC) will have their refunds delayed until at least February 15th of year in which they file. Traditionally, EITC filers would file their returns immediately at the beginning of the year. For many taxpayers the refunds (including the EITC) represent a large portion of their income in many cases thousands of dollars. The immediate filing would result in a rapid influx of income at the beginning of the year. However, this is an area subject to fraud and abuse and the IRS was concerned that many of the refunds were not legitimate. To give them more time to analyze returns and minimize abuse, the quick turnaround of EITC returns is now gone and the IRS will have additional time to make sure the taxpayer is deserving of the credit. The IRS must now delay the entire refund, not just that portion regarding the EITC. Tax preparers should advise EITC clients that the quick turnaround and influx of cash from a large refund will not occur as rapidly as in the past.
