Tax refunds worth $14.4billion have finally been issued to 11.7million Americans after three months of waiting. The IRS announced the tax refunds are being mailed out this week, but many are reporting that they have not yet received their cash. Refunds worth $3billion were paid out in 2017, but this year it took until March 25 for the same number to be handed out.
Fraudsters had been stealing the refunds by filing fraudulent returns under the stolen identities of taxpayers. The Internal Revenue Service (IRS) has been working to combat the fraud, but hundreds of thousands of dollars were still stolen before the plan was put in place. The agency reported that it prevented $1.5billion in fraudulent returns from being issued this year – a 27-percent increase on last year’s total of $1.2billion.
A new law introduced in 2015 will limit the refunds issued to families claiming the Child Tax Credit (CTC) instead of Additional Child Tax Credit (ACTC). The CTC is designed to help parents with their expenses, while the ACTC helps low-income families.
It’s believed that as many as a 4.8million families should not have received the refunds after the first $3,000 was removed from their returns. The average family, due to a refund, will now receive around $1,800 instead of $2,900 – which is good news for those struggling with debt or savings.
The average amount owed to families and individuals is $1,635.
Fraudsters tried to get around these limits by claiming the money for other dependents who did not exist. Under rules introduced in 2017, refunds issued to people claiming dependents were delayed until the IRS could check they existed.
However, the IRS has been criticized for not canceling the payments. If the agency had canceled them, then taxpayers would not have to repay fraudulent refunds that were issued. Fraudsters could try and claim up to $25,000 per child in one year.
The family would receive a reduced refund once they file their tax returns, although stopping any refund from being issued would have been the best option. The IRS claims it never has enough time to plan for any delays in refunds.