U.S. Reps. Bill Pascrell, Jr. (D-NJ-09), the Chairman of the House Ways and Means Oversight Subcommittee, and Richard Neal (D-MA-01), the Chairman of the House Ways and Means Committee, have introduced corrective legislation to undo tax refund delays for recipients of the Earned Income Tax Credit (EITC) who file their taxes early. This delay also could impact Child Tax Credits (CTC) claimed by these EITC taxpayers.  

“Americans who file their taxes early should not be penalized for their scrupulousness,” said Reps. Pascrell and Neal in a joint statement. “Millions of recipients of both the Earned Income and Child Tax Credits are entitled to promptly receive the refunds they have earned, but because of a statutory requirement many of their payments are delayed if they file early. While well intentioned, these delays hurt too many regular Americans, so we are offering this simple change to remove the refund blockade and allow the IRS to issue fast refunds to all early filers.”

Pursuant to a law enacted in 2015, the IRS must withhold refunds for filers who claim certain refundable tax credits early in the tax filing season until February 15. This delay is intended to allow the IRS time to match information from individual tax returns with information on the W-2 forms from employers, which are sent to the IRS by January 31 as a way of preventing identity theft and fraud. The proposed bill would allow the IRS to issue refunds of the EITC and the CTC before February 15 if the amount on the tax return has been matched (verified) with Forms W-2.