WASHINGTON, D.C. (JANUARY 26, 2012)
BY MICHAEL COHN, ACCOUNTING TODAY

The Internal Revenue Service warned Thursday that tax refunds could be delayed a week this tax season because of new anti-fraud safeguards.

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“The IRS has opened its filing season successfully this month, and refunds have started going out to many taxpayers,” the agency said in an email to tax professionals on Thursday. “As with the start of any tax season, there are system validations that occur requiring some fine-tuning of our systems. As part of this, some taxpayers will receive refunds approximately one week later than initial projections they may have received, but these are still in line with historical refund delivery times.”

The IRS noted that the one-week delay is related to the fine-tuning of IRS systems to adjust for new safeguards that were put in place this tax season to provide for stronger protection against tax refund fraud.  The agency has come under heavy criticism for the increasing number of identity theft cases related to tax refunds, and it recently added more stringent measures (see IRS Steps up Efforts to Combat Identity Theft).

The IRS said it is providing additional screening for fraud this year before issuing refunds, but the vast majority of taxpayers can still continue to expect to receive their refunds in a timely fashion.

The IRS also noted that the refund time frames provided by the “Where’s My Refund” tool on its Web site are projected time frames and are subject to revision. “Many different factors can affect the timing of the refund after the IRS receives the return for processing,” said the agency. “The IRS apologizes for any inconvenience caused by the revised refund dates.”

When the IRS announced the opening of the 2012 filing season, it advised taxpayers who electronically file and select direct deposit that they could see their refunds in as few as 10 days and 90 percent of refunds are provided within 21 days, the IRS added. Some taxpayers are getting refunds much faster, according to the agency, but at this time taxpayers should expect refunds to be issued as indicated in the original IRS guidelines.

An unplanned outage of the IRS's efile system also apparently led to trouble, according to KION TV's Central Coast News, and visitors to the Where's My Refund tool saw error messages. Agents with Jackson Hewitt and H&R Block have also seen a statement from the IRS about the problem, according to News Channel 7 in the Carolinas. The statement indicated that problems with the IRS's fraud screening and detection process could have an impact on 60 to 70 percent of the returns accepted before 11 am on January 18, and as part of testing on January 10, 11 and 12.