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Correcting the Record: Tax Relief for American Families and Workers Act Protects Taxpayers and Prevents Attempts to Politicize Americans’ Tax Refunds

January 26, 2024 — Blog    — Press Releases    — Select Revenue Measures   

WASHINGTON, D.C. – To ensure taxpayers receive the benefits of the Tax Relief for American Families and Workers Act as quickly as possible, the legislation instructs the IRS to update its systems and process any additional tax refunds on an expedited timeline. This is crucial to protecting Americans from having their tax refunds subject to political gamesmanship.

A simple reading of the bill.

Under the Tax Relief for American Families and Workers Act, the Biden Administration is explicitly prohibited from manipulating the bill’s tax relief in an attempt to send politically timed refund checks against the interests of the American people:

  • The text of the legislation includes a requirement that the IRS process any adjustments that might be needed to already-filed tax returns “as expeditiously as possible,” and the IRS has confirmed its intention to make necessary systems updates by around six weeks after the date of enactment.
  • The legislation therefore makes it illegal for the Biden Administration to delay tax refunds for political purposes. 
  • Congress will hold the IRS accountable to fulfill both the letter and intent of the law.

The child tax credit changes will require relatively few adjustments, which will be handled within the scope of IRS’s normal operations.

Changes to the child tax credit within the legislation will affect a small subset of taxpayers within certain income ranges:

  • Nearly 90 percent of American taxpayers are guaranteed to have no adjustment to their tax liability due to the child tax credit changes – they will file their taxes and receive refunds as normal.
  • A subset of remaining households will receive modest adjustments to their tax refunds, but the IRS will process those refunds without any additional action required on the part of the taxpayer. What’s more, adjustments will only be required if (1) they filed their taxes early and (2) their household income falls within a specific range.
  • On a bipartisan basis, Congress has already engaged with the IRS so that updates to the agency’s systems will be streamlined and that taxpayers will not have to file amended returns to account for the child tax credit changes in the bill.

IRS system updates for the child tax credit are far less complicated than the implementation of COVID-era programs.

Prior updates made to IRS systems, such as those for COVID-era programs like unemployment insurance and economic impact payments, are not an apt comparison to the changes needed under the Tax Relief for American Families and Workers Act:

  • The number of taxpayers affected represents a fraction of those covered in the COVID-era programs.
  • The length of the filing season period to be affected and the size of tax adjustments are much smaller in scale.
  • The IRS has received advance notice of the forthcoming changes, providing additional time to initiate its system update process.