Millions of Americans are beginning to get their documents together in preparation for tax season.
More than 153 million returns are expected to be filed this year but many will have a delay in getting their refunds because of a law called the PATH Act.
This law affects individuals, families and businesses—anyone who will claim the Earned Income Tax Credit or the Additional Child Tax Credit.
The PATH Act, which was enacted in 2015, mandates the IRS not issue a refund on tax returns claiming those specific credits until February 15th.
According to IRS statistics, about 80 percent of the tax fraud surrounds these specific credits.
According to a local tax expert, the delay could be about 30 to 45 days from when people are typically accustomed to getting their return.
While it's inconvenient, it's not necessarily a bad thing. This additional time helps the IRS stop fraudulent refunds from being issued to identity thieves and fraudulent claims with fabricated wages and withholdings.
In 2014, the IRS statistics suggested they lost about $6.5 billion to tax fraud.
In 2016, they're projecting losing $21 billion.
"It's a huge federal problem we're dealing with. The IRS in 2016, in partnership with a lot of private industry banks, tax professional firms, etc., are hoping to decrease tax fraud and ID theft by up to 50 percent. So we're hoping the IRS is finally getting in front of the fraudulent refunds,” says James Streetman, managing member of Streetman, Jones & Powers, LLC.
To learn more about the PATH Act you can go here: https://www.irs.gov/uac/newsroom/path-act-tax-related-provisions
For more information on key changes in 2017 go here: https://www.irs.gov/individuals/steps-for-tax-filing-season
And for generic information go here: https://www.irs.gov/
Streetman recommends people preparing and filing their returns as soon as they can and you should be getting your certain tax forms in the mail within the next few weeks.
He adds if you’re one of the lucky ones who gets a refund, it’s a personal decision on how you spend it.
"I would consider paying down debt and investing. And using that money to predominantly increase your retirement contributions,” says Streetman.