Holiday shoppers counting on a tax refund to pay the bills early next year may come up short because of automatic delays on some refunds.
Congress mandated an automatic delay for refunds on any tax return that claims an Earned Income Tax Credit or an Additional Child Tax Credit. Each tax credit especially benefits lower-income filers by alowing a refund even if no taxes were owed.
The Internal Revenue Service said the automatic delay runs at least until Feb. 15, though these refunds often have been claimed early in the tax season. It means holiday shopping bills might come due before the refund shows up.
“This is an important change, as some of these taxpayers are used to getting an early refund,” IRS commissioner John Koskinen said in an announcement. “We don’t want anyone caught by surprise if they get their refund a few weeks later than in previous years.”
Tax season this year began when electronic filing opened on Jan. 19. The IRS says refunds normally go out within 21 days of filing, which would have been Feb. 9 for the earliest filers this year.
The automatic refund delay applies to the entire refund, not just the part from the two tax credits.
These delays are part of an effort to combat fraud associated with refunds and stolen identities. The delay gives the IRS more time to detect and prevent fraud.
Other anti-fraud efforts reduced by more than half the number of reports of stolen identities on federal tax returns early this year.