The purpose of the PATH Act The Protecting Americans from Tax Hikes Act (PATH Act) has been around since late 2015, and one of its key provisions is intended to protect taxpayers and their families from tax fraud.
To do this, the PATH Act requires some extra security measures of the IRS during the processing period.
Refund delays for some early filers
The PATH Act requires the IRS to take extra time when examining tax returns claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC).
These two family-focused credits are refundable, meaning that any amount left after covering your tax liability will be given in a refund. And you better bet the criminals are on that faster than you can say “inflated refunds.”
With the extra review time mandated by the PATH Act, the IRS is better able to stop refunds from being issued via fraudulent claims.
ITIN renewals and changes
The IRS issues an Individual Taxpayer Identification Number (ITIN) to individuals who aren’t eligible for a Social Security Number but still need a tax ID.
Since many cybercriminals use neglected ITINs to file fraudulent tax returns, any ITIN that hasn’t been used at least once in the last three years needs to be renewed. If you don’t renew, your ITIN could cause delays or even ineligibility for some tax credits.
You may have some delays based on the credits you claim, and you might have to take some time to renew your identification, but these PATH Act requirements are ultimately in place for your security and protection.