Stimulus Checks Issued to Decedents Cancelled by the IRS

 

• Learn more about stimulus checks to deceased individuals.
• Find out how to stop payments in-process on stimulus checks already issued.
• Learn more about the IRS’s authority to deny stimulus payments to deceased individuals.
• Discover more about the history of stimulus payments.
• See examples of the IRS’s Q&A’s dealing with deceased individuals and the return of stimulus payments.

According to the recently updated IRS FAQ page, the Treasury Dept. has cancelled outstanding Economic Impact Payment checks issued to ineligible recipients. This includes those declared deceased. Some sources indicate the Bureau of Fiscal Services, the agency issuing the stimulus checks, has stopped payment on uncashed checks. They may even be having those that have already been deposited into existing bank accounts reversed.

Is this an overreach by the Treasury Department? The CARES Act, passed by Congress in March and the legislation that authorized the stimulus payments, says anyone alive in 2019 is entitled to a payment. Fiducial has some background on this issue.

The backstory on stimulus checks issued to decedents

In late April, Treasury Secretary Mnuchin gave an interview to the Wall Street Journal. In it, the Wall Street Journal quoted him as saying that stimulus checks to deceased individuals should be returned. However, he provided no statutory authority requiring the return of such payments.

Nina Olson, the former longtime IRS Taxpayer Advocate and founder of the Center for Taxpayer Rights, has asked, “What is the legal reasoning for this?” In various publications she noted, as mentioned earlier, that the CARES Act doesn’t say deceased people can’t receive stimulus checks. Furthermore, she added that the hard stance may have come from the White House.

There was a similar situation in 2008 during the world-wide Great Recession when real estate values tanked. At that time, Congress also authorized stimulus payments and the Treasury Dept. issued payments to deceased individuals. Back then, no requirements existed for the reimbursement of payments made.

How are things different now?

Some of the later stimulus checks sent out this year were in an IRS envelope that stated that forgery of endorsements is a federal crime, etc.. In addition, the envelope had a check box reading, “If recipient is deceased, check here and drop in mailbox.”

According to the Treasury Inspector General for Tax Administration, as of May 21, 2020, the IRS had issued more than 157 million Economic Impact Payments totaling more than $264 billion. Of those, less than 1.2 million payments (less than 1 percent) were issued to deceased individuals.

The new IRS Q&A’s

Who is eligible for a stimulus payment?

As time has passed, the IRS has gotten more aggressive about their position on returning stimulus checks made to deceased individuals, even though they have not quoted any statutory authority. The IRS Q&A has added updates to include the following:

Q2. Who is not eligible for a Economic Impact Payment?

A2. Taxpayers likely won’t qualify for an Economic Impact Payment if any of the following apply:

• You do not have any qualifying children and your adjusted gross income is greater than

o $198,000 if your filing status was married filing jointly
o $136,500 for head of household
o $99,000 for all other eligible individuals

• You can be claimed as a dependent on someone else’s return. For example, this would include a child, a student claimed on a parent’s return, or a dependent parent claimed on their child’s return.
• You do not have a Social Security number valid for employment.
• You are a nonresident alien.
• You filed Form 1040-NR or Form 1040NR-EZ, Form 1040-PR, or Form 1040-SS for 2019.
• An incarcerated individual.
• A deceased individual.
• An estate or trust.

How to return stimulus checks or other payments

Q65. What should I do to return an Economic Impact Payment that was received as a direct deposit or a paper check?

A65. You should return the payment as described below.

If the payment was a paper check:
Write “Void” in the endorsement section on the back of the check.

1. Mail the voided Treasury check immediately to the appropriate IRS location listed below.
2. Don’t staple, bend, or paper clip the check.
3. Include a brief explanation stating the reason for returning the check.

If the payment was a paper check and you have cashed it, or if the payment was a direct deposit:

1. Submit a personal check, money order, etc., immediately to the appropriate IRS location listed below.
2. Write on the check/money order made payable to “U.S. Treasury” and write 2020EIP, and the taxpayer identification number (social security number, or individual taxpayer identification number) of the recipient of the check.
3. Include a brief explanation of the reason for returning the EIP.

Q66. How do I return an Economic Impact Payment that was received as an EIP Card (debit card) if I don’t want the payment re-issued?

A66. If you received your EIP as a debit card and want to return the money to the IRS and NOT have the payment re-issued, send the card along with a brief explanation stating you don’t want the payment and do not want the payment re-issued to:

Money Network Cardholder Services
5565 Glenridge Connector NE
Mail Stop GH-52
Atlanta, GA 30342that

Questions about stimulus checks?

Have questions related to stimulus payments to deceased individuals or others? Call Fiducial at 1-866-FIDUCIAL or make an appointment at one of our office locations. Ready to book an appointment now? Click here. Know someone who might need our services? We love referrals!

For more small business COVID-19 resources, visit Fiducial’s Coronavirus Update Center to find information on SBA loans, tax updates, the Paycheck Protection Program, paid sick and family leave, and more.