How The IRS’s Shutdown-Induced Delay Will Hurt The Poor

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Heather Turner, who uses her EITC refund to stretch her family's budget

Thanks to the government shutdown, the Internal Revenue Service (IRS) says it will delay the start of the tax-filing season by a week or two so that it has enough time to get its systems ready. It will begin accepting returns somewhere between January 28 and February 4 and will announce in December when the season will actually start.

This delay may be an inconvenience for some filers, but for poor and working families, many of whom rely on Earned Income Tax Credit (EITC) refunds, it could be devastating.

Early filers are predominantly “lower earners and eligible for EITC and other refundable credits,” Robert Kerr, senior director of government relations at the National Association of Enrolled Agents, told ThinkProgress. He pointed out that the average refund size at the beginning of the filing season is larger than at the end, which is likely “driven by the refundable credits.”

Waiting on those refunds can have significant impacts. “The early filers are typically EITC recipients who may be receiving $3,000 or more in tax refunds as soon as their returns are processed–the largest single amount they see all year,” Joe Valenti, director of asset building at the Center for American Progress, said. They can even be as much as $5,000. “These dollars typically go toward paying off existing debts and making larger necessary purchases (car repairs, appliances, winter coats), and may also go toward savings or budgeting for the months to come.” Matt Gardner, executive director of the Institute on Taxation and Economic Policy, agreed. “For families living on the margins, even a temporary delay in the arrival of this refund can make it harder to pay rent and utilities or buy food,” he said.

Some refunds even allow filers to avoid eviction, getting utilities cut off, or cars repossessed. “So a three-week delay could be a real problem,” Kerr said. Many of those who file early are living paycheck to paycheck. “A two week delay of a sizable refund that is expected in late January is much like missing a paycheck—except worse, given that the refund is larger than most of the filers’ paychecks,” he added.

Individual stories paint a picture of how crucial EITC refunds can be. Beverly, a single mother of Worcester, MA, used her refund to pay off bills and become debt free. Rev. Lauren of Virginia lives on a limited monthly income and uses the ETIC credit to meet basic needs throughout the year.

Each one-week delay in beginning the season will likely produce a week delay on the other end in issuing refunds. But Kerr was optimistic that it wouldn’t last too long. Based on his past experience with the IRS, he predicted that “the agency will hit the earlier side of the two-week window,” adding, “I would be surprised if the season opened any later than the outside of this projection.”