Tax refunds are a return of the excess amounts of income tax paid by a taxpayer to the state or federal government in a financial or calendar year. In the United States in particular, they are often received in the form of US savings bonds, personal checks, or direct bank deposits according to the taxpayers’ preferences. After the initial filing of one’s annual income tax, the refunds are usually issued a few weeks afterwards. Majority of taxpayers tend to perceive these refunds as a “stroke of luck” or “bonus” at tax time and are always delightful about them.
However for this year, it has been widely announced in many states that unlike last year, it may take a longer time for taxpayers to receive their refunds. The main reason for this according to the state tax authorities is the extra security measures that are being taken to prevent tax fraud that has become very rampant in the country, especially in the recent past. Having said this, I wish to elaborate briefly the main aspects of tax fraud that are being practiced.
The first is where an individual or a business entity willfully and deliberately falsifies information on the tax return so as to limit the tax liability (actual tax to be paid). This entails the person(s) cheating on a tax return in a bid to avoid payment of the full tax obligation.
Another aspect is the common identity theft that has increased across the nation. This is whereby some people use stolen private information of others to file a tax return so as to receive their tax refunds without the victim knowing about the fraud. The victims would then be aware of this the moment their returns are rejected by the tax authorities upon trying to file them. This has also become a very prevalent problem and has cost the country a lot of money and time, not to mention the constant complaints from the affected taxpayers.
To try and combat these malpractices, there is a lot of checking and scrutinizing by the tax authorities. The authorities are using more extra time so that they can match data from multiple sources and ensure that the right person gets the refunds. And a point to note is that during the past year’s tax season, this process proved to be successful and in particular, the IRS is said to have prevented issuance of many millions of dollars of those refunds to fraudsters.
To also avoid the tax theft, many states have encouraged the taxpayers to file taxes the soonest possible rather than later to avoid chances of a thief filing on their behalf. All these measures are aimed at reducing any potential for fraud and ensure identity theft protection.
The implementation of the additional security measures in the states has and would inevitably delay the processing of the tax returns. In this regard, some states have even warned the taxpayers that no matter how soon they may file a return, the process would still delay. This then calls for patience on the part of the taxpayers.
To sum it up, it’s clear that despite the delay caused by this hectic but noble process, waiting as long as it’s demanded is worth it; with the hope that positive results can be achieved both in the short term and in the long term.