The IRS is delaying tax refunds for more than 40 million low-income families this year as the agency steps up efforts to fight identity theft and fraud. The delays will affect families claiming the earned income tax credit and the additional child tax credit. These tax breaks are geared to benefit the working poor, and many families claim both. "For most of these people it's the biggest check they are going to get all year," IRS Commissioner John Koskinen says in an interview with the AP. "We are sensitive to that." The tax filing season starts Jan. 23. But a new law requires the IRS to delay tax refunds for people claiming these credits until Feb. 15. Processing times will delay most of the refunds until the end of February.
The delay is designed to give the agency more time to screen the returns for fraud. The IRS estimates that it issued $3.1 billion in fraudulent tax refunds to identity thieves in 2014. The year before, the agency says, it paid out $5.8 billion in fraudulent refunds. Over those two years, the IRS says it blocked nearly $47 billion in fraudulent refunds. The earned income tax credit is one of the federal government's largest anti-poverty programs. It has also been plagued by billions in improper payments each year, including overpayments, underpayments, and fraud. In 2014, about 29 million families received more than $72 billion in earned income credits.