If your tax refund is late, there could be one of two reasons. Firstly, there has been a computer glitch at some tax-preparation companies including industry leader H&R Block that affects some 600,000 taxpayers claiming for education credit. The IRS has been working with tax-preparation businesses to deliver the refunds as soon as possible and by now most of the refunds have been sent. H&R Block has since rectified their computer glitch and all systems are back up and running. Other major tax preparation companies including Jackson Hewitt Tax Services and Intuit Inc were not affected. None of their customers experienced delays getting their tax refunds.
The second major reason for refund delays this year is the increased scrutiny the IRS has given to cases claiming the Earned Income Tax Credit (EITC), a tax benefit that has been sorely abused by tax fraudsters. Due to this IRS employees have been carefully reviewing returns with claims for the EITC. However, IRS spokesman Terry Lemons told Reuters that ‘fewer than 5% of filings claiming the EITC have been delayed’. The small percentage of returns that got delayed due to this reason are being processed and the taxpayers concerned will soon be able to track their refund on the IRS website, www.irs.gov by going to the ‘Where’s my refund’ link.
According to the Treasury Inspector General for Tax Administration (TIGTA), more than 13 million Americans claimed the EITC in 2012 at a cost of $38 billion last year. The EITC is very popular among the lower income group because it is an anti-poverty program started in 1975. Only those who meet the income, age and employment prerequisites may apply for the EITC. Many of the claimants are resident aliens holding low-paying jobs. One of the ways these people abuse the EITC is by submitting a claim for children who do not even reside in the United States.
To deter this fraud, the IRS this year is asking EITC taxpayers working with a preparer to prove a child is living with them by providing a report card or doctor's bill. But only returns filed with a tax preparer need provide this information. A taxpayer claiming EITC benefits can obtain an average of $3,452 for three or more children.
The increased incidents of such tax fraud have resulted in some delays in obtaining tax refunds. To find out the status of your refund, click the ‘Where’s my Refund?’ link at www.irs.gov.