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New Federal Tax Law May Affect Some Refunds Filed in Early 2017 - AG Tax LLP

November 30, 2016

The U.S. Internal Revenue Service (IRS) recently announced that it will be delaying Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC) refunds until February 15th, 2017 in order to process filed tax returns that claim EITC and ACTC.

Delay in EITC & ACTC Refunds until February 15th, 2017

This delay is being driven by the Section 201, passed as a part of the various tax laws associated with the “Protecting Americans from Tax Hikes Act of 2015” (PATH Act). Section 201 mandates that no credit or refund for an over-payment for a taxable year will be made to a taxpayer before February 15th of every tax year, until proper verification has been done for those taxpayers claiming Earned Income Tax Credit or Additional Child Tax Credit on their return.

This law was passed due to the IRS incurring significant revenue loss in the previous years due to false refund claims from fabricated wages and withholding’s. This was majorly because of identity theft. Delaying the refund process will provide the IRS sufficient time to properly analyze those returns in which refunds have been claimed, to prevent falling prey to identity theft situations.

Although, this change impacts from January, 2017 onwards, the IRS is sharing this information so that tax professionals can inform their clients accordingly so that taxpayers do not worry or question their tax practitioner about the delay in refund.

That being said, although some refunds could be delayed, taxpayers should continue to file their return on time. The IRS will start accepting and processing the returns once the tax season begins. Please note that the IRS will continue to issue most refunds within the stipulated 21 days period but withhold the full refund only for those returns in which EITC and ACTC have been claimed.

AG TAX LLP CAN HELP

If you have any tax-related queries, need assistance with tax planning or filing your tax returns please contact us. Our team comprises of highly experienced tax professionals with extensive knowledge of US and Canadian tax laws as well as cross-border compliance.

Furthermore, as a full service accounting firm, AG Tax assures complete assistance with even your most complex tax needs.

We can assist with:

  • Canadian Personal and corporate tax returns
  • Cross Border Taxation and Business Planning
  • US Personal and Corporate Taxation
  • Disclosure of Foreign Assets and other information filings
  • Retirement planning
  • Estate Planning, Inheritance tax advice

To obtain a quote or to arrange for a consultation to discuss your tax related queries, please contact us at:

  • 416-238-5920 (Greater Toronto Area, ON)
  • 604-538-8735 (Greater Vancouver Area, BC)
  • 780-702-2732 (Greater Edmonton Area, AB)

 

Disclaimer: The information in this publication is accurate as of the time of its publication. AG Tax assumes no responsibility for changes to tax legislation subsequent to the publication of this document. The information provided is for general information purposes only and should not be acted upon without seeking professional advice. If you would like to engage our services, please contact our staff and obtain authorization to send our firm confidential information. A client relationship is not created by the transmission of information. A client relationship is only formed with our firm when a scope and engagement letter signed by the firm and the potential client detailing the terms of engagement is present.

ABOUTAG Tax LLP
With offices across Canada, we are positioned to manage and process the full scope of your Canadian, US and US Canada cross-border tax filing needs.
OFFICEVancouver
12752 28th Ave, Surrey, BC, V4A 2P4
OFFICEEdmonton
104–4220 98 St NW Edmonton AB, T6E 6A1
ABOUTAG Tax LLP
With offices across Canada, we are positioned to manage and process the full scope of your Canadian, US and US Canada cross-border tax filing needs.
OFFICEVancouver
12752 28th Ave, Surrey, BC, V4A 2P4
OFFICEEdmonton
104–4220 98 St NW Edmonton AB, T6E 6A1

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