Last month, I reported that the current tax season was off to a slower start than normal. Data from the Internal Revenue Service (IRS) and tax preparation software giant TurboTax indicated that fewer taxpayers were filing tax returns with Intuit characterizing the lack of activity as “tax season forming more slowly than usual.” My prediction was that those numbers would turn around fairly quickly after February 15. It turns out that I was wrong.
Why February 15? More than a year ago, Congress passed the “Protecting Americans from Tax Hikes (PATH) Act of 2015.” Under the law, the IRS was required to wait until February 15, 2017, to issue refunds to taxpayers who claimed the earned-income tax credit (EITC) or the additional child tax credit (ACTC).
(You can read more about the new law here.)
By law, the IRS could begin to release affected tax refunds on February 15.
(You can estimate the timing of your tax refund with this chart.)
I assumed that taxpayers who would have otherwise filed early in order to claim a refund were simply waiting for the deadline (even though the IRS emphasized that it would process tax returns normally before that date). The data seemed to back this up. And the natural leap would be that after that date, taxpayers who might have waited because of the delay would now file. But that doesn’t seem to be happening. While refund numbers are still down, so, too, are the numbers for returns received and returns processed. Even trips to IRS.gov are down.
Here’s a peek at some of the numbers:
You can see all of the most recent filing season stats here.
Keep in mind that the filing season did open four days earlier last year, on January 19, 2016, than the 2017 filing season which opened January 23, 2017. The IRS noted that calendar year-to-year comparisons are difficult at the early point of the season because of the differences in open dates.
Maybe taxpayers are wondering what might happen to the Affordable Care Act individual mandated penalty (the GOP proposal would repeal it retroactively to January 1 of this year) or otherwise waiting to see what might be happening with respect to tax relief.
Maybe taxpayers fear they might owe more taxes this year and are waiting until the last minute to file (remember that you can file early and still wait to pay up until Tax Day with no penalty).
Maybe taxpayers with corporate and partnership interests are still sorting out the new due dates.
Who knows? Whatever the reason, it looks like taxpayers are still holding out this tax season.
