The IRS has posted information on how people who weren’t supposed to receive their economic impact payments for the coronavirus pandemic should return the money.
The CARES Act included provisions for sending economic impact payments of at least $1,200 to individuals, and $2,400 to married couples, plus $500 per dependent child.
The program, however, has been seen some issues since it was rolled out. The IRS had to rely on information from taxpayers’ 2018 and 2019 tax returns to send the money. In some cases, the IRS sent money to the families of deceased taxpayers or people who live abroad and don’t qualify for the payment. Undocumented and incarcerated taxpayers also aren’t considered to be eligible.
A Frequently Asked Questions page has been setup on the IRS website about the economic impact payments, and information has been added about which taxpayers are ineligible and how to return the payments if money was received.
If the payment was a paper check, the IRS gave the following instructions:
If the payment was a paper check and the taxpayer has cashed it, or if the payment was a direct deposit, the IRS recommended that taxpayers:
Further information on returning payments and ineligible recipients can be found on the IRS website here.
The IRS has not issued clear penalties for those who do not return these payments. At this time, it appears the IRS is strongly recommending the return of payments, however, it is not suspected they will pursue individuals legally. This has not been confirmed.
We will continue to monitor this for additional updates and keep you informed on any changes. Please contact your Whalen advisor for further questions regarding this announcement.