The Internal Revenue Service has announced initial plans for processing tax returns involving the Earned Income Tax Credit, Additional Child Tax Credit and American Opportunity Credit during the opening weeks of the 2017 filing season.
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 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, Additional Child Tax Credit or American Opportunity Credit on the return.
- To comply with the law, the IRS will hold the refunds on Earned Income Tax Credit, Child Tax Credit and American Opportunity Credit related returns until Feb. 20.
- This allows additional time to help prevent revenue lost due to identity theft and refund fraud related to fabricated wages and withholdings.
- 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 Earned Income Tax Credit, Child Tax Credit and American Opportunity Credit.