Understanding Tax Refund Delays and the PATH Act

Tax refund delays can frustrate taxpayers eagerly awaiting their returns. These delays often stem from various factors, including legislative measures like the Protecting Americans from Tax Hikes (PATH) Act. Understanding these delays helps manage expectations and ensures a smoother tax filing experience.

Understanding the PATH Act

The Protecting Americans from Tax Hikes (PATH) Act, enacted in December 2015, introduced changes impacting tax refund timing. One key provision requires the IRS to delay refunds for taxpayers claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) until mid-February. This delay allows the IRS additional time to verify income and withholdings, helping to reduce fraudulent claims.

The Act also made permanent the Section 179 expensing provision, enabling businesses to immediately expense up to $500,000 of qualifying property, with a phase-out threshold of $2 million. Additionally, it extended bonus depreciation, initially allowing businesses to depreciate 50% of the cost of new equipment in the first year, though this percentage has decreased over time.

Common Reasons for Refund Delays

Several factors contribute to refund delays. Errors on tax returns, such as mismatched Social Security numbers or incorrect bank account details, can lead to processing setbacks. The IRS must resolve these discrepancies before issuing refunds.

Claiming certain tax credits and deductions can also complicate filings. For example, the Child and Dependent Care Credit requires specific forms, and errors on these can slow down processing. Similarly, complex returns involving multiple income sources, such as investments or rental properties, may face heightened scrutiny.

Enhanced IRS security measures to combat fraud can also delay refunds if additional documentation is required. During peak filing seasons, the IRS’s workload and limited resources can further slow processing times.

How to Track Your Refund Status

The IRS provides tools to help taxpayers monitor their refund status. The “Where’s My Refund?” tool on the IRS website allows users to check their refund status within 24 hours of e-filing or four weeks after mailing a paper return. To use this tool, you’ll need your Social Security number, filing status, and the exact refund amount from your return.

The tool displays three stages: Return Received, Refund Approved, and Refund Sent. “Return Received” confirms the IRS has your return and is processing it. “Refund Approved” means processing is complete, and your refund is being prepared for distribution. “Refund Sent” indicates your refund has been dispatched via direct deposit or paper check.

For mobile access, the IRS2Go app offers similar features, providing updates on the go. Available for iOS and Android devices, it also includes tax tips and payment options.

Steps if Your Refund is Delayed

If your refund is delayed, start by reviewing your tax return for errors or omissions. Check for inconsistencies in reported income or claimed deductions. If you find errors, consider filing an amended return using Form 1040-X.

If the delay persists, contacting the IRS can provide clarity. Be prepared with your Social Security number and filing status to expedite the process. The IRS also offers a Taxpayer Advocate Service, an independent organization that assists taxpayers facing financial hardship due to delays.

Contacting the IRS for Assistance

When delays continue, reaching out to the IRS directly can help. Have your tax return details ready, including your Social Security number, filing status, and the exact refund amount.

The IRS offers assistance through its toll-free helpline, where representatives can explain delay reasons and advise on next steps. Calling during off-peak times, such as mid-morning or late afternoon, can reduce wait times. For general inquiries, the IRS website’s FAQ section addresses common refund-related concerns and provides additional resources.