Why does the Earned Income Credit and Additional Child Tax Credit postpone my tax return for a longer date? What is it that the IRS is looking for when it comes to this?

[womackmathew]

I have 3 children and my wife is a stay at home mom. We would just like to know why our tax return is going to be held extra long because of the new Tax Law know as PATH I believe. Would like to know why this law is in effect and what does this mean for future filing of my taxes?

[xmasbaby0 · Accepted solution]

Every year there are millions of dollars' worth of fraudulent claims for those credits.  The IRS is taking steps to look more closely at claims for EIC and ACTC to avoid paying fraudulent claims.

[Opus 17]

The PATH act made a number of changes to the tax code, mostly to keep or extend certain tax breaks.  However, one provision relates to EIC and ACTC fraud.  The most common way to steal from the IRS is to make up a fake tax return and a fake W-2, claim just enough income to get EIC, and collect the refund before the IRS has a chance to verify that the W-2 sent by the taxpayer matches a W-2 copy sent by an employer.  The PATH act requires that employers must send their copies of W-2s by January 31 (instead of March 31), and requires that the IRS hold EIC refunds until Feb 15, so they can verify that a taxpayer's claimed W-2 matches an employer W-2.  The goal is to reduce EIC fraud which means a delay in paying legitimate claims.

There is some thinking that in the future, all refunds will be delayed until W-2s and other records can be verified.  So far that has only be started for EIC and ACTC refunds.