PATH Act Delaying Returns For Many Americans
One of the biggest stories in the news is that the PATH Act will lead to many tax refund delays. Understanding why the delays are happening will help many to figure out if they will be affected. It will also help make sense of the impact the delayed returns will have on the economy.
What is the PATH Act
The Protected Americans from Tax Hikes (PATH) Act is an act of Congress that was passed that will have a huge impact on American tax payers. The Act was largely intended as a measure to cut down on tax fraud. It does, however, have the unwanted impact of delaying taxes for many.
Who is It Going to Affect?
The PATH Act is expected to impact around forty million Americans, most of whom are in the lower tax brackets. Because the delay targets those who receive the Earned Income Credit and the Additional Child Tax Credit, most of those who will be impacted by the delay are individuals and families who have low incomes. Even with this said, a fair number of Americans in higher tax brackets are likely to deal with the delay, especially if they have children. As a rule, the less tax owed by families with larger numbers of children, the more likely the family will be to deal with the delay.
What are the Effects of the Delay?
The biggest effect on the delay will, of course, be on the bank accounts of the people who are impacted by the delay. By delaying the tax refunds, many individuals who depend upon the refunds in the early winter are likely to deal with at least minor financial problems. This will likely end up trickling into many sectors of the economy, most importantly the retail industry. It would not be unlikely to see many large discount retailers publishing lower than expected quarterly numbers, especially the delays lead to a tighter leash on consumer spending.
On the other hand, the PATH Act will likely end up putting more money into the hands of people who rightfully deserve it. Because the extra scrutiny is used to weed out those who would wrongfully claim deductions or claim the social security numbers of others, the general level of fraud should take a hit. This will allow some potential victims the chance to get money faster than they would otherwise and it will keep many people from having to deal with predatory thieves.
The PATH Act will have both positive and negative impacts on the economy. It will hurt individuals and retail sales, but it is likely to improve the flow of refunds from the government to those who should claim them in the long run. While there’s certainly a great deal of uncertainty right now, only the future will tell if the generally good intentions of the Act pay off. For now, though, millions of families will anxiously await their tax returns so that they can get the money that they have already paid into the system. The hope continues to be that the delays won’t be quite as long as anticipated.
For more information on the PATH Act, click here.