Tax refunds delayed by fraud fine-tuning

Few folks are as eager as those awaiting a tax refund.

Well, there's bad news for some of you early filers.

New anti-fraud measures implemented this tax filing season have caused the Internal Revenue Service to be a bit slow in sending out refunds.

After getting calls from taxpayers and tax professionals wanting to know why folks were still waiting for refunds -- e-filers generally can expect their directly deposited refunds in about 10 days -- the IRS announced that the tax cash could be delayed a week because of a new anti-fraud safeguards.

Here's the official email word from the IRS via its QuickAlert notification system:

"As with the start of any tax season, there are system validations that occur requiring some fine-tuning of our systems. As part of this, some taxpayers will receive refunds approximately one week later than initial projections they may have received, but these are still in line with historical refund delivery times.

The one-week delay for some refunds relates to fine-tuning IRS systems to adjust for new safeguards put in place this tax season to provide stronger protection against refund fraud. The IRS is providing additional screening for fraud this year before issuing refunds, but the vast majority of taxpayers can still continue to expect to receive their refunds in a timely fashion."

ID theft issues: While the delay is understandably irritating, the reason is legitimate.

Tax refunds lost to identity thieves is a growing problem. In 2010 alone, reported the Government Accountability Office (GAO) last year, the IRS identified more than 245,000 incidents of identity theft.

While that amount is tiny when you consider that around 140 million of us file tax returns, it represents a nearly five-fold increase in taxpayer identity theft between 2008 and 2010.

It's just too bad the IRS couldn't test its fraud detection system before filing season began.

Not so fast: There are reports, however, that the "vast majority" of taxpayers the IRS says are getting their refunds quickly might be overstated.

Beverly Russell, a financial planner for Jackson Hewitt in Spartanburg, S.C., told CBS affiliate WSPA-7 that his office received a memo from the IRS saying they were "researching an issue with their fraud screening and detection process, which could impact between 60 to 70 percent of refunds for this funding cycle. This would include returns accepted by the IRS before 11 a.m. on January 18th."

"They're using the term 60 to 70 percent will get delayed," Russell told the TV station. "So that means 30 to 40 percent will get through, so I don't know which 30 or 40 percent is going to be happy or not."

Refund timing: As I noted in my earlier post about when to expect your tax refund, those delivery dates are estimates.

The IRS reiterated that in its notification about this delay:

"The IRS reminds taxpayers that refund time frames provided by "Where's My Refund" and tax providers are projected time frames and are subject to revision. Many different factors can affect the timing of the refund after the IRS receives the return for processing.  The IRS apologizes for any inconvenience caused by the revised refund dates."

So if you filed early and are getting a bit anxious about your refund, this probably is the reason you haven't received it yet.

You can find out its exact status by using the agency's Where's My Refund tracking tool.

And not to be too much of a tax nag, but it's also another reason why you should adjust your withholding.

A tweak of your W-4 will mean you won't have to depend on the IRS to send you back your cash that you could have had control of all year.

You also might find these items of interest:

• Tax refunds as forced savings accounts
• $153 million in tax refunds returned as undeliverable
• Tax refunds: Spending tips, payroll withholding effects

Comments

[shredding Houston]

To be victimized by any kind of fraud is indeed unfortunate especially if you have worked hard to earn a decent living and somebody else takes hold of your identity and takes it all away. This reminds us to be vigilant in safeguarding our person information.

[ernestine]

there are some people who is frauding the system and have their money like it aint nothin. we work our butttt off and have to wait 30days to get anything. some is getting put out of their home,lights,gas being turned off. why do we have to suffer.

[Gloria]

Congress just had a hearing, Taxpreparers, taxpapers, somebody got fed up the excuses. Somebody may lose their jobs if they don't get this together. Somebody needs to make the untouchable IRS accountable for the long delays to the American taxpayers of this fine country. You just can’t hide behind a computer glitch or a time frame when so many are affected without any pattern or reason. Communication is too advanced and everything is too transparent these days for generic answers. Use the old machine and churn the refunds out if the new machine is stalling on everyone. Thanks for this article.

[Tom Janzen]

So I e-filed with Turbo Tax on 3/5, after 72 hours I checked the IRS site which said to expect refund 3/20, than later 3/13, now says 4/24 but when I enter my wife's SSN it says 3/27 so I'm confused...

[Kim]

I mailed my refund on 2/1/2012. It is now 3/15/2012 (6 weeks later). I call them and they say that they can't give me any information, and they don't have any record that they even recieved it yet. Now that it has been 6 weeks they say I need to wait till it has been 8 weeks. they need to get their information straight. Is it 6 weeks or 8 weeks??? I asked if I should mail it again because they could have lost it and they said no because that would cause futher delays if they do have it. But they cant even confirm they have it. This is so annoying. If I have to mail it again, I will mail it with a confirm recipt.

[Janine Harkness]

Four 7 weeks now "Where's my refund" has said my refund is expected March 20, now all of the sudden on week before I am due to get it they change the date to March 27.

What the heck!

[John Welborn]

Filed my taxes electronically on Feb 26 using TurboTax. Today, March 14, the "Where's my refund" IRS site is telling me the expected date for my refund is now April 24 due to "processing delays". That shows you how incompetent the IRS has become.

[r.woodard]

I have grave concerns about irs, they have had my refund since 02/07/12 and everytime i call it is liking beating down a bush, they keep lying, saying that they cannot tell me anything about my refund, fially after days of calling, I get an answer, somewhat but still nothing, a letter is being mailed to my husband but they will not tell me what the letter is all about, I keep speaking my mind and then she stated that the letter was processd on 02/24/12 thats all she could say. I am vbery disappointed with the IRS, not sure why now.

[SICK OF FEES]

I Just want everyone to know about HR block fees. Today I found out that they charge $25 for cash advances off the emerald card. I called the # on the back of the card wanting to transfer funds to a checking account and the lady told me that it would take 5-7 days to post. I didn't do it and went to the bank. she is the one who told me about the $25 FEE and advised me to take all of my money off the card except $25 and I did. in lest than20 min I got a text message from H&R BLOCK saying that a cash advance was made (this did not take 5-7 days) on the card. So let's say there is $500 on the card and I get the advance for $475 And later H&R BLOCK send a text message that $500 was taken off the card which is what was originally on the card. They took $25 as a FEE.

[Shahidul]

Hi,
Thank you for your nice article on Tax refunds delayed by fraud fine-tuning.I was searching article on tax refund. I like it.I will keep watching this blog for your future writing.keep writng this type of article.
Thanks