The Tax Policy Center has released a report on the impact of the EITC refund delay mandated by the PATH Act (the Act requires the IRS to delay refunds for tax filers who claim the EITC or additional child tax credit until at least February 15). Using IRS data, a survey of low-income tax filers, and interviews with tax preparers, the report authors assess the likely extent of the impact as well as the ways in which a delay may impact tax filers.
The report’s authors lay out the following findings:
- even though the benefits of the EITC and CTC are concentrated on families with children, many households without children will likely be affected by the delay; these households qualify for a relatively large refund, even though they receive only a small EITC;
- in our sample of Intuit data, households that file early in the tax season tend to receive larger refunds than those filing later, and households that claim the EITC or CTC file earlier than those not receiving these credits;
- the effect of the delay will likely be felt most acutely by those with the largest refunds, specifically families with children;
- four out of five of these families face some sort of financial hardship, and these families also report high rates of alternative financial service use and low levels of liquid assets; and
- most families receiving refunds intend to use the refund to pay down existing debt.