PATH Act

New Federal Tax Law May Affect Some Refunds

PATH Act Tax-Related Provisions

The Protecting Americans from Tax Hikes Act of 2015 (the PATH Act), was enacted on December 18, 2015. The PATH Act contains several changes to the tax law that affect individuals, families, businesses and help safeguard against tax fraud.

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.

• To comply with the law, the IRS will hold the refunds on EITC and ACTC-related returns until Feb. 15.
• 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 EITC and ACTC.
• Taxpayers should file as they normally do, and tax return preparers should also submit returns as they normally do.
• The IRS will begin accepting and processing tax returns once the filing season begins, as we do every year. 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 2018 until Feb. 15 and then begin issuing them.

This is one more step the IRS is taking to ensure taxpayers receive the refund they are owed. The IRS plans to work closely with stakeholders and IRS partners to help the public understand this process before they file their tax returns and ensure a smooth transition for this important law change.