Likely triggering a collective sigh of relief among millions of American taxpayers claiming the Earned Income Tax Credit or the Additional Child Tax Credit, the IRS has begun disbursing refunds that had been previously subject to a temporary hold. This comes as welcome news to many individuals who had filed their returns early only to discover that they would not receive their refund checks until sometime after February 15 due to a new adjustment to existing law.

Why tax refunds were delayed

A recent change in regulations required the IRS to delay payment of tax refunds owed to filers who claimed either the Additional Child Tax Credit or the Earned Income Tax Credit on their 2016 returns. The new rule was enacted as a means to crack down on fraud and identity theft which had previously resulted in the filing of fraudulent returns and an unacceptably high number of refunds being paid to tax scammers. While the revenue agency still urged taxpayers to file as early in the season as possible, the delayed distribution of refunds afforded it a greater opportunity to detect nefarious activity and prevent monies from falling into unscrupulous hands.

Timing of receipt for previously delayed refunds

Those who claimed either of the popular credits on their 2016 returns and who have already filed can expect refunds to appear sometime during the week of February 27, provided the IRS encounters no additional questions or concerns about the information received. With typical refunds approaching $3,000 the year before, many taxpayers in the affected category will be very pleased to see their checks or direct deposits finally arrive.

Tax-related identity theft on the rise

Officials from the IRS have redoubled their efforts to curb the growing dilemma of computer-initiated identity theft, a class of crime which increased 400 percent over the 2016 tax filing season. Those intent on doing harm in this way have a number of methods at their disposal for getting hold of filers’ personal information, including the use of malware and phishing emails. Sadly, it is often the case that victims of such schemes do not become aware of what has happened until their filing is rejected by the IRS, and an arduous process of untangling the mess must begin.

IRS recommends steps to guard against identity crimes

Though the IRS regulation that withheld certain classes of refunds for a short period this tax season is an important part of the agency’s efforts to limit identity theft, officials suggest that taxpayers also take a series of initiatives on their own to protect their personal data and access to tax refunds. These include:

  • Refusing to provide Social Security numbers to just anyone who requests it
  • Reviewing credit reports at least once per year
  • Protecting home computers with anti-virus software, firewalls and regularly updated passwords
  • Remaining careful about providing personal data over the telephone or Internet if contact was not personally initiated or expected
  • Not carrying Social Security card or similar identifying documents around on a daily basis

Tax assistance for individuals and businesses throughout the Mid-Atlantic

The professionals of Rosenberg Martin Greenberg understand the challenges taxpayers face when it comes to maintaining the integrity of their valuable data and remaining in full compliance with all IRS and state revenue agency rules. If you or your business are in need of help with a specific tax-related concern or would like to explore proactive strategies designed to limit future liabilities and exposure, contact us for a confidential, informative consultation by calling today.