Tax Refund Payment Delays For Returns With Earned Income and Child Tax Credit Payments (PATH Act)

This article was last updated on March 16

It looks like we are having a repeat of past year tax refund payment delays millions of American’s faced (and are still facing) this year. The IRS recently warned that there will likely be tax refund delays for many taxpayers subject to several new factors and legislation (e.g. PATH Act and new Stimulus Legislation)

Hence the IRS is urging tax payers to look closely at their tax withholding to ensure the right amount is being withheld. If too much is withheld then the people would expect a fatter tax refund this year, but with likely delays it could take quite a while to receive this. So only withhold what you have to and avoid giving the IRS a free tax payer loan.

Tax law changes around two key tax credits are driving the IRS’ warning to review your withholding. One is the new law to hold tax refunds a few weeks for some early filers claiming the Earned Income Tax Credit and the Additional Child Tax Credit. Under the Congress Act – Protecting Americans from Tax Hikes (PATH) – the IRS must hold the entire refund — even the portion not associated with the EITC and ACTC — until at least three weeks after the IRS starts processing returns (early March this year). The additional time helps the IRS stop fraudulent refunds from being issued to identity thieves and fraudulent claims with fabricated wages and withholdings.

In addition, the IRS and state tax administrators continue to focus on and deal with identity theft and refund fraud which are expected to increase this tax season. This will mean even more tax returns could again require additional reviews which all this takes extra time with the staffing/budget constraints at the IRS. 

You can see key deadlines and filing dates for the tax season here.  The IRS is still recommending that tax payers file as usual and is expecting most refunds (where applicable) to be issued within the normal timeframe: 21 days or less, after being accepted for processing by the IRS.

One thought on “Tax Refund Payment Delays For Returns With Earned Income and Child Tax Credit Payments (PATH Act)

  1. 3:54PM CST. The IRS just sent out a press release. The IRS Where’s My Refund tool will not update for those that still have the PATH act message. It will begin updating WMR on March 16th through March 18th for the vast majority of EITC/ACTC taxpayers.

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