Refunds could be delayed for Missouri and Illinois taxpayers

(Credit: KMOV).

( - More than one million people in Illinois and Missouri could have to wait longer to get their tax refund in 2017.

For some early tax filers who claim the Earned Income Tax Credit and the additional Child Tax Credit, the Internal Revenue Service announced this week that a new law requires the agency hold refunds until at least the middle of February. As a result of the new law, there will also be extra steps to check for identity theft which could result in a “slight delay.”

As in the past, the IRS will start processing tax returns once the filing season starts. Even though the IRS will not be able to issue refunds for some early filers until at least February 15, the IRS reminds taxpayers that most refunds will still be issued within the normal time frame: 21 days or less, after the return is accepted.

''This is an important change to be aware of for some taxpayers used to getting an early refund," said IRS commissioner John Koskinen. "We'll be focusing on awareness of this change throughout the fall, but it's important for taxpayers who might be affected by this to be aware of the change for their planning purposes. Although we still expect to issue most refunds within 21 days, we don't want people caught by surprise if they get their refund a few weeks later than previous years."

These changes are a result of the passage of the Protecting Americans from Tax Hikes (PATH) Act of 2015. While the majority of the law simply makes some temporary tax credits permanent, parts of the bill attempt to crack down on what some investigators have called a “formula for fraud.”

News 4 Investigates has covered that type of tax credit fraud for years.Two years ago, News 4 Investigates spoke with now former U.S. Attorney for Southern Illinois, Steve Wigginton, about how he saw tax credit fraud time and time again.At the time, Wigginton told News 4 the recipe for maximizing tax fraud was simple, "False W-2, coupled with false number of dependents, coupled with false claims for tax credits."

Last year, IRS Commissioner John Koskinen told News 4's Chris Nagus the agency has filters in place to detect tax credit fraud.

Koskinen told Nagus, "I won't get into all our filters in detail, but we have filters that knock out a lot of refunds for further investigation."

However, prosecutors and experts claimed agency safeguards were not enough to stop the stealing of tax dollars. Therefore, the new rules that crack down on fraud, could affect the tens of millions of honest tax filers who use either credit.

The latest date available from the IRS, filing year 2014, shows 27.5 million tax returns claimed the Earned Income Tax Credit which added up to $66.7 billion in refunds or an average of $2,400 per filer.In Illinois, 1 million filers claimed the EITC while 502,000 filers in Missouri.

"These increased security screenings are invisible to most taxpayers," Koskinen said. "But we want people to be aware we are taking additional steps to protect taxpayers from identity theft, and that sometimes means the real taxpayers face a slight delay in their refunds. As we continue improving our processes and working with the states and the tax industry, we will stop more fraud while also fine-tuning our tools to reduce the number of innocent taxpayers who might see a refund delay. "

Copyright 2016 KMOV (Meredith Corporation). All rights reserved.

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