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IRS Announces Tax Refund Delay
The IRS has announced that due to delays experienced due to the partial government shutdown in 2013 that the filing season for electronically filed returns will not open until January 31, 2014
Although electronic filing (efile) was intended to expedite tax return processing and shorten the time that filers would be issued their income tax refunds, the IRS now states that the process has contributed to an increase in fraudulent refund claims and identity theft. One cannot overlook the fact that the U.S. is now facing a fiscal cliff whereby the Treasury is in desperate need of cash needed to keep the government operating. As a result the IRS has announced that refunds will no longer be issued within the five to seven day period which U.S. taxpayers had come to rely on. Now the average refund time for “non risk” returns will be 14 days and those returns deemed to be high risk will see refunds issued in 28 days, assuming that the returns are not pulled for examination.
Also due to an increase in perceived abuse and fraud regarding returns claiming the subsidy Earned Income Credit (“EIC”), refunds pertaining to those returns claiming the EIC will be delayed for 75 days. Accordingly tax filers who are entitled to and claim the benefit of the EIC should file as early as possible. Also, any tax return that is amended for the purpose of claiming the EIC will undergo close scrutiny by the IRS as will other returns claiming the EIC benefits.
Taxpayers who claim the EIC can expect to be contacted directly by the IRS to verify certain information. In addition, these filers will be required to provide documentation to their tax return preparers substantiating their relationship as regards dependents claimed on the tax return which entitle them to the EIC refundable tax credit (social subsidy).
Tax return preparers of filers claiming to be entitled to the EIC will be required to maintain these documents and list them on their EIC documentation checklist. Clients of Powers & Company will be required to provide this supportive documentation before the return is electronically filed and all tax preparation fees will be payable prior to the time that the return is efiled.