Democratic leaders of the Main-Tax-Writing Committee have introduced legislation to reverse delays on tax refunds for those who receive the Earned Income Tax Credit. The Earned Income Tax Credit (EITC) is a refundable tax credit focused on helping low-to-middle class Americans. The amount of the credit is contingent on the individual’s income, how many children (or dependents) they have, along with other criteria.
Overview
Currently, the IRS still uses the extra time to check for fraud, however, under the proposed changes the IRS would be able to issue EITC refunds before the date set under current legislation, February 15th. While the timeframe may change these refunds would still only be issued to those qualifying and receiving a W2 form. This being said, the IRS would still be authenticating under their new system, but potentially not to the extent that they previously were.
This proposed bill stems from the idea that Americans should not get penalized for filing early. Millions of Americans will be filing the EITC this year, and the leaders of the Main-Tax-Writing Committee believe that all recipients who file early are entitled to promptly receive the refund that they have earned. This has not been the case for many recipients under past procedures who had to endure delays due to the statutory requirements.
As this tax season kicks off, it should be known that this bill is unlikely to affect this year. The Biden Administration and other political figures have made the Build Back Better Plan their primary focus for months now, and push back from those with opposing viewpoints is causing this bill to become stagnant.
Wrap Up
This bill is something to keep an eye on because it could be introduced at any time and implemented during the next tax season. The passing of this bill would come as great news to millions of Americans entitled to the Earned Income Tax Credit, especially since it means filers would likely not have to deal with delays that can cause some to struggle financially.
Thoughts? Feel free to give us a call at 516-541-6549. And don’t forget to visit our website for more news updates!