PATH Act

The Protecting Americans from Tax Hikes Act, or PATH Act for short, was signed into law on December 18, 2015. It is a landmark piece of legislation that extends several tax breaks and credit programs and changes the tax filing process. The PATH Act requires the IRS to wait until mid-February to release refunds claiming the Earned Income Credit (EITC), Additional Child Tax Credit (ACTC), or Work Opportunity Tax Credit (WOTC. This gives the IRS more time to verify taxpayers’ eligibility for these credits and stop fraudulent claims and returns. Businesses are also required to provide W-2s, W-3s, and 1099s to the IRS by January 31.

Another key component of the PATH act was requiring a valid Individual Taxpayer Identification Number (ITIN) to file a federal tax return, which is also designed to protect taxpayers from identity theft. The law also required that ITINs be renewed every three years. However, the IRS still deals with massive backlogs and other issues that can slow down returns and refunds. For this reason, expect the release of your approved EITC, ACTC, or WOTC refund to take longer than expected in 2023.

This has been the case for many past seasons, although it appears to be improving this year. As you can see in the table below, the actual date of your WMR and IRS2Go updates is usually a little earlier than the estimated dates. The earliest related refunds can start hitting bank accounts or debit cards by February 28, though the IRS notes that some taxpayers may have their funds available sooner. The IRS is not allowed to release any part of the refund not associated with the EITC or ACTC, which allows them to prevent fraudulent claims.

How the IRS uses the PATH act?

For the uninitiated, the PATH act was a clever way for the IRS to identify and track tax return filer changes without doing the legwork themselves. It is a laudable effort to ensure that no one files a fraudulent or fraudulently amended return. The best part is if you were lucky enough to get a refund, you are rewarded with the sweet swag of an IRS-branded debit card in the mail. It is a small consolation, but it is worth the trouble if you need to keep track of your monies.

There is a reason for this – if you file an incorrectly amended return, you will be subject to fines and jail time. The WMR or IRS2Go app uses the path act as a heuristic to identify filer changes and provides an array of useful tools for navigating the tax maze.