More than 1 million taxpayers in Arizona could be affected by a new law that kicks in Jan. 1. It requires the Internal Revenue Service to hold refunds for people claiming the Earned Income Tax Creditor the Additional Child Tax Credit until at least mid-February.
IRS spokesman Bill Brunson said the law, approved by Congress, will give the agency more time to detect and prevent fraud. He said the average earned income-tax credit for Arizona last year was $2,612, and the average additional child tax credit per filer was $1,432. Both credits are based on certain income requirements.
“The IRS wants people to be aware of this change for planning purposes during the holidays,” he said. “The IRS does not want anyone to be caught by surprise if they get their refund a few weeks later than in previous years.”
A report by the U.S. House Ways & Means Committee last year found the improper payment rate for the earned income tax credit was around 25 percent, while a Treasury Department audit from this year estimated the improper payment rate for the advanced child tax credit was also around 25 percent. Improper payments include incorrect amounts along with payments made to ineligible recipients.
The IRS has a documentwith details for people claiming the credits as well as other information for filing a 2016 federal income-tax return.
