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Where’s my Refund? New IRS Form 8867

Where’s my Refund? New IRS Form 8867
Ines Zemelman, EA
15 January 2017

Your tax return was prepared and you’ve asked your tax preparer to e-file your return as soon as possible in order to receive your refund.

Recent law changes may affect your refund date

- If your refund is due to excessive estimated payments, you should expect an early refund.

- Other type of refunds, aka Refundable Tax Credits, will be delayed and not be released by the IRS until February 15. This delay is intentional and is mandated by a provision in the PATH Act, enacted by Congress in 2015, prohibiting the IRS from releasing certain refunds prior to February 15..

- The PATH Act mandates that the IRS not issue a refund on tax returns claiming the Earned Income Tax Credit or Additional Child Tax Credit until Feb. 15. The additional time helps the IRS stop fraudulent refunds from being issued to identity thieves and fraudulent claims with fabricated wages and withholdings.This provision takes effect this tax year.

A prior history of tax-related identity theft was one of the factors triggering those changes. The individuals engaged in this practice filed false returns early in the filing season, before the IRS had copies of legitimate W-2 forms. With the new earlier deadline for filing W-2’s with the government, plus the delay in processing refunds, it is anticipated that attempts of tax-related identity theft will be easier to track. The IRS will match W-2s and other forms, along with other unspecified security checks to help assure the filed return is genuine and claim for refund is legitimate.

Taxpayers claiming Earned Income Credit, Additional Child Tax Credit or American Opportunity Credit may expect even longer delay. Moreover, the process of claiming those refunds will now be more complicated and involve additional work for yourself and your tax advisor.

Even more important to maintain records - new form 8867 - Tax Preparer Due Diligence Checklist

Supporting documents for refund claims must be presented to your tax advisor who will make a copy and describe supporting document in a new - Form 8867, Paid Preparer's Earned Income Credit Checklist. If necessary, your tax advisor will interview you to clarify gaps or ambiguity found in the presented documents.  Don’t shoot the messenger! These questions are prompted by new IRS regulations.

So when should we file our return?

It is still a good idea to file early to get in the queue for earlier processing by the IRS.

While waiting for your refund, although tempting, please don’t blame or call your preparer.  Once they have e-filed the return (and provided you with confirmation), the status of your refund is out of their hands. Don’t blame or call the IRS. They are merely following the law. There is a silver lining in this arduous process and this legislative-mandated delay is probably a good thing - it will likely reduce the incidence of fraud. Putting things in perspective, it’s better to wait a few days or weeks for your refund than go through the hassle of tax-related identity theft and waiting months for the refund to arrive.

Ines Zemelman, EA
founder of Taxes for Expats