Questions Linger Over How the IRS Will Distribute Stimulus Checks

Questions linger on how the Internal Revenue Service will process and distribute relief checks approved as part of the massive economic stimulus package that the House is expected to pass Friday and President Trump is expected to sign. 

The $2 trillion stimulus package the Senate passed late Wednesday will give checks to Americans to help alleviate the financial burden from business closures aimed at curbing the spread of the novel coronavirus. Treasury Secretary Steven Mnuchin said during a White House briefing on Wednesday night that he would like to distribute the checks within three weeks for those who have deposit information on file with the IRS. 

“This is the kind of thing that the IRS does this really well, in the sense that you give it this challenge and it drops everything and it marshals its forces around it,” said Center for Taxpayer Rights Executive Director Nina Olson, who was the head of the National Taxpayer Advocate, an independent organization within the IRS that helps people resolve tax problems, for 18 years. Additionally, the agency has “had the experience” of giving out stimulus checks in 2001 and 2008.

However, unlike 2008, the agency is trying to get the checks out immediately, so the IRS is allowing individuals to use their fiscal 2018 or fiscal 2019 tax return information. Olson said this will make it “a lot simpler...[because] it’s data that they’ve got.” However, a challenge could be that if the IRS uses 2018 information, individuals’ bank accounts or addresses could be outdated. 

Similarly, Olson said while it’s good that the bill has a provision saying the IRS can use Social Security or retirement benefits forms to find where to send checks, it could be a challenge to find current addresses and bank accounts for those who work and don’t make enough to file tax returns and/or aren’t receiving such benefits. In addition to the text of the bill, “they’re going to have to put out more guidance because of these pockets of taxpayers that we don’t have information on or they have old information on.” 

Also, the modified operations due to the coronavirus are “ a huge challenge” because the IRS suspended in-person visits, has reduced phone service and is encouraging people to use online services, which may be difficult for older people. “In 2008, there were something like almost 30 million calls that came in to the dedicated economic stimulus payment line,” Olson said. “That really caused the phones to not be answered even when the IRS was staffed. So when you’re looking at the budget cuts since 2008 plus the fact that so much of your workforce is not going to be answering the phones because they’re not set up to answer them from home, you’re not going to be able to get through.” 

Lastly, she added the IRS is dealing with a “difficult tax season,” as it was extended to July 15. The IRS is also only in the second year of the president’s tax system overhaul and has faced severe staffing and budget cuts. The National Taxpayer Advocate stated in its 2019 annual report to Congress that since fiscal 2010, the agency's budget had decreased by about 20% and there were about 20% fewer employees. Meanwhile the number of tax returns the agency received increased by 9%.

The $250 million in the stimulus package for the IRS is “helpful” to compensate for the cuts, but Olson noted the agency does difficult work and future hiring could be complicated by the logistics of the coronavirus.

In response to Government Executive’s questions on how the agency will distribute the checks, an IRS spokesperson pointed to a website that will have updates on the stimulus payments as they become available. The Treasury Department did not respond to a request for comment. 

The check amounts the IRS will distribute depend on how much individuals make and how many children they have. Those who made less than $75,000 in fiscal 2019 will be eligible for the full payment of $1,200 and for every child will receive $500. For salaries above $75,000, The Washington Post created a calculator to estimate what you will receive. 

“For the vast majority of individuals, the IRS has to figure out how to put households together and then figure out a way to get money to them,” Mark Mazur, a former IRS and Treasury official, told Bloomberg News. “The idea that IRS has this all-knowing view of what your family looks like is just not true.” The outlet reported it could take weeks, not months, for checks to process. 

In addition to former officials, the National Treasury Employees Union (whose 150,000 members include about 47% IRS employees) addressed the situation the IRS is facing in commending the Senate for passing the legislation. 

“We urge Americans to think of the IRS employees who will process these stimulus checks–and others across the federal government–who are still on the job providing necessary services to protect our public health, the economy and our security,” NTEU President Tony Reardon said in a press release on Thursday. “Many federal workers are able to telework during this crisis and continue providing services that American taxpayers depend on.”