New ID theft filters have caused tax refund delays

IRS officials sent notices to tax professionals recently apologizing for a delay which the agency says will only affect some early filers – but if you filed after January 26, you’re in the clear.

The reason for the delay was issues with the agency’s newly-installed filters, which are designed to prevent tax fraud and identity theft. The delay was expected to only last about a week, although some have found that their refunds will be delayed by as much as two weeks.

The delay has caused concern among tax preparation chains like Jackson Hewitt and H&R Block. Both have been fielding calls from anxious taxpayers counting on their refunds. The chains have also been offering less refund anticipation loans, or rapid refunds, because of the delay.

The IRS has been working for the past year to step up its efforts to prevent identity theft by installing these new filters in its computer systems, which the agency hopes will catch identity theft attempts before refunds are issued. The changes came after the IRS was pressured by Congress and the National Taxpayer Advocate, as well as the Tax Inspector General for Tax Administration.

In years past, the IRS has issued millions of dollars in tax refunds based on fraudulently filed tax returns. The newly-installed filters are supposed to increase the IRS’ ability to spot bogus tax returns before they are processed and before a refund is issued.

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