PATH Act and Its Impact on Your U.S. Tax Filings
The Protecting Americans from Tax Hikes (PATH) Act was passed in 2015. It introduced several changes that affect taxpayers, particularly those who use an Individual Taxpayer Identification Number (ITIN) and those claiming certain refundable tax credits.
ITIN Expiration Rules
The PATH Act requires ITINs to expire if they have not been used on a U.S. federal tax return for three consecutive years. In addition, ITINs issued before 2013 expire according to a schedule based on the middle digits of the number.
If your ITIN has expired, you will need to renew it before filing your tax return. Filing with an expired ITIN can lead to delays and may prevent you from claiming certain credits.
Refund Delays for Certain Credits
The PATH Act also requires the IRS to hold refunds for taxpayers who claim the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) until at least mid-February. This applies even if you file your return early.
This delay is intended to give the IRS additional time to verify claims and prevent identity theft and fraudulent refunds.
Stricter ITIN Application Process
The law tightened the requirements for applying for or renewing an ITIN. Applicants must now submit original identification documents or certified copies from the issuing agency. Using a Certified Acceptance Agent (CAA) can make the process easier and avoid delays.
What You Should Do
- Check if your ITIN is still valid before the start of each filing season.
- Renew it in advance if it has expired.
- Be aware that refunds involving the Earned Income Tax Credit [EITC] or Additional Child Tax Credit [ACTC] will be delayed until mid-February.
- Keep your identification documents up to date.
Final Thoughts
The PATH Act has made it more important for taxpayers, especially ITIN holders, to plan for tax season. Understanding the rules around ITIN expiration, credit-related refund delays, and documentation requirements is essential for compliance and avoiding penalties.
Need help with tax filing, ITIN renewal, or claiming refunds? Our expert team is here to assist. Contact us today!
We are one of the IRS Enrolled Agents with many years of experience in US 1040/1040NR personal tax compliance reporting and FATCA Compliance FBAR Reporting. We are happy to assist our clients in a timely, efficient, and cost-effective way.
