IBA Compliance Connection

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The U.S. Department of the Treasury has announced that they will be processing advance Child Tax Credit payments authorized by the American Rescue Plan Act starting on July 15. Will there be a process for us if customers come to us after July/August or later in the year stating they didn’t want the credit or didn’t want an advance payment of the credit? Should we return ACH credits back to the Treasury as R-23, Credit Refused by Receiver?

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We are not aware of any process currently set by the Treasury Department or IRS for assisting customers who wish to refuse payments of the 2021 Child Tax Credit after they have automatically received the payments. We recommend that you advise customers that wish to refuse the credit to unenroll from it through the Child Tax Credit Update Portal, which is now available. Additionally, we recommend standing by for additional guidance from the IRS before deciding whether to return these payments.

The IRS recently posted FAQs related to the American Rescue Plan Act’s Child Tax Credit that partly addresses questions about individuals who wish to refuse the credit. The FAQs explain that these individuals will be able to unenroll through the Child Tax Credit Update Portal, which is now active. Any customers who wish to unenroll should be able to do so before the first payments are made on July 15.

Additionally, the FAQs state that more details regarding the Child Tax Credit Update Portal will be provided in questions and answers once the portal is available. We recommend checking back on the FAQs before July 15 for additional guidance for individuals who wish to unenroll from the credits after the first payment is made.

For resources related to our guidance, please see:

  • IRS, Advance Child Tax Credit Payments in 2021 (“We’ll use information you provided earlier to determine if you qualify and automatically enroll you for advance payments. You do not need to take any additional action to get advance payments.”)
  • IRS, 2021 Child Tax Credit and Advance Child Tax Credit Payments Frequently Asked Questions, Q A5 (June 14, 2021) (“What if I do not want to receive advance Child Tax Credit Payments? If you prefer not to receive monthly advance Child Tax Credit payments because you would rather claim the full credit when you file your 2021 tax return, or you know you will not be eligible for the Child Tax Credit for your 2021 tax year, you will be able to unenroll through the Child Tax Credit Update Portal (CTC UP). CTC UP will be available in June and will allow you to unenroll before the first advance Child Tax Credit payment is made. You will not be able to unenroll before the portal is open. For more information regarding CTC UP, see Topic F: Updating Your Child Tax Credit Information During 2021.”)
  • IRS, 2021 Child Tax Credit and Advance Child Tax Credit Payments Frequently Asked Questions, Q F4 (June 14, 2021) (“What do I need to do to unenroll myself from receiving advance Child Tax Credit payments? The Child Tax Credit Update Portal (CTC UP) will allow you to unenroll from receiving advance Child Tax Credit payments. More details will be provided regarding CTC UP through these questions and answers once the portal is available.”)