IRS Anti-Fraud Push Stalls Refunds to Many

Six weeks into this year’s tax filing season, the Internal Revenue Service’s anti-fraud efforts have held up refunds to more than 800,000 people and caused filing problems for hundreds of thousands, perhaps millions, of others, according to the agency and angry tax preparers around the country.

The delays are especially widespread among low-income taxpayers seeking extra refunds under programs such as the earned income tax credit (EITC), which is meant to boost the income of poor working families. In many cases, these credits are being separated from the normal wage refund and held as long as two months or more.

In addition, when the IRS does pay the refund, it does so with a regular paper check rather than a direct deposit into the taxpayer’s bank, ignoring requests for the quick electronic transfer because of computer programming problems.

“We are seeing angry people; we are seeing disappointed people; we are seeing desperate people,” said Harry W. Buckley, president and chief executive of H&R; Block Tax Services Inc. in Kansas City, Mo.

He and other tax professionals say frustrated taxpayers are venting their wrath on preparers.

“It’s shoot the messenger. We’re the ones who have to tell them” their refund has been held up, said John T. Hewitt, chief executive of Jackson Hewitt Tax Service in Virginia Beach, Va.