What is PATH Act?
The PATH Act (Protecting Americans from Tax Hikes Act of 2015) is federal legislation enacted on December 18, 2015 that prohibits the IRS from releasing refunds for taxpayers claiming Earned Income Tax Credit (EITC) and/or Additional Child Tax Credit (ACTC) prior to February 15.
According to the IRS website the law was enacted to help prevent identity theft, and the entire refund held until at least February 15th.
What's the Impact?
This legislation will create funding delays of up to six weeks or more for an estimated 30M taxpayers filing at the beginning of the tax season. As much as $100B+ in federal tax refunds may be delayed.
On December 9, 2016 the IRS announced that "...many affected taxpayers may not have actual access to their refunds until the week of Feb. 27."
Will my client's refund be delayed?
The PATH Act refund delays only impacts taxpayers that are claiming Earned Income Tax Credit (EITC) and/or Additional Child Tax Credit (ACTC) prior to February 15th. Visit the IRS website for more details about PATH Act refund delays.
What solution can I offer my clients?
We offer taxpayers two great solutions to the challenge created by PATH Act refund delays.
Hang onto more cash with the Assisted Refund1
If clients can’t pay their tax preparation fees up-front they can have their return prepared and pay nothing up-front. Tax preparation fees are paid from their refund once the IRS releases the refund. Free up cash to pay bills and buy things they need.
Get cash weeks before the refund is available with the Early Tax Refund Advance or Tax Refund Advance2
Clients that can't wait 6 weeks for your refund can receive up to $1,500 before tax season starts with an Early Tax Refund Advance. Receive up to $3,500 at the start of tax season with a Tax Refund Advance. Tax Refund Advances are approved within hours of IRS acceptance of the tax return during tax season.
1 An Assisted Refund (AR) permits payment of tax preparation and other fees with your refund upon completion of services. It is not a loan. AR processed by Santa Barbara Tax Products Group, LLC using banking services of First Century Bank, N.A. AR processing fee and other fees may apply. Ask a Tax Pro for details and refund options with no additional cost. Most offices are independently owned and operated by Jackson Hewitt franchisees. All other offices are owned and operated by Jackson Hewitt Inc. or its affiliated entities.
2 The Early Tax Refund Advance (ETRA) is a loan secured by, and paid back with, your tax refund and is offered by First Century Bank, N.A. Loan amounts are determined by your expected federal refund, less authorized fees and underwriting. Loan amounts are $300, $500, $1,000, and $1,500. To be eligible for the $1,500 ETRA loan, your expected federal refund, less authorized fees, must be at least $5,000. Most approved applicants get $300. ETRA loan is subject to underwriting and approval. Loan proceeds are typically available on the same day of approval, if disbursed on a prepaid card offered at Jackson Hewitt offices, or in 1-5 business days with direct deposit. Terms and restrictions apply. For details visit jacksonhewitt.com/loans. Jackson Hewitt is a Rhode Island Licensed Loan Broker and holds other relevant licenses for the locations where this product is offered. If approved, a finance charge applies except for residents of CT and NE. The Tax Refund Advance (TRA) is a loan secured by, and paid back with, your tax refund and is offered by First Century Bank, N.A. Loan amounts are determined by your expected federal refund, less authorized fees and underwriting. Loan amounts are $500, $750, $1,000, $1,500, $2,500, and $3,500. To be eligible for the $3,500 TRA loan, your expected federal refund must be at least $5,000. Most approved applicants get $1,500. TRA loan is subject to underwriting and approval. Loan proceeds are typically available on the same day of approval, if disbursed on a prepaid card offered at Jackson Hewitt offices, or in 1-5 business days with direct deposit. Terms and restrictions apply. For details visit jacksonhewitt.com/loans. Jackson Hewitt is a Rhode Island Licensed Loan Broker and holds other relevant licenses for the locations where this product is offered. If approved, a finance charge applies except for residents of CT and NE.