IRS is Ready to Distribute Stimulus Checks if Trump Approves Bill
President Trump threw lawmakers for a loop after he blasted a pandemic relief spending package as insufficient. The outcome is uncertain.
While there will likely be some challenges in distributing the second round of stimulus payments authorized in the $900 coronavirus relief bill awaiting President Trump’s signature, the Treasury Department is better positioned to handle the payments than it was during the first round earlier this year.
Whether or not the department has an opportunity to demonstrate that is another matter. President Trump blasted the relief package in a video message late Tuesday as being insufficient, but House Republicans on Thursday rejected a move by Democrats to increase the stimulus payments.
The bill, which was included with the $1.4 trillion spending package for fiscal 2021, allocated payments of up to $600 for eligible recipients and $600 for child dependents to help Americans weather the economic impact of the pandemic. The amount is less than the first round of payments authorized by the CARES Act in March. While the bill’s fate is uncertain and the timeline and ultimate amount of potential stimulus payments remains unclear, the IRS and Treasury Department are preparing for whatever may come.
As of September 30, the Treasury Department and Internal Revenue Service sent out over 165 million payments from the CARES Act, totaling over $274.7 billion. However, the Treasury Inspector General for Tax Administration found that as of April 30, the IRS sent almost 1.1 million payments (totaling about $1.4 billion) to deceased individuals. As a result, the Government Accountability Office recommended that the IRS “consider cost-effective options for notifying ineligible recipients how to return payments,” which it agreed to do.
“Treasury and IRS took actions that are consistent with our recommendations, such as using tax return information to identify and notify nearly 9 million individuals that they may be eligible for an EIP,” GAO said in a report issued on November 30. “However, Treasury and IRS have not updated estimates of those who could be eligible, but have yet to file. Without an updated estimate, Treasury, IRS, other federal agencies, and IRS’s outreach partners may be limited in their ability to appropriately scale and target outreach and communication efforts to additional individuals who may be eligible for a payment.”
Nevertheless, top officials have expressed confidence about handling the next round of payments.
“We are as prepared as we could be, but we are better prepared than we were the last time and I think we did admirably the last time,” IRS Commissioner Charles Rettig said during a hearing in October, when asked about a potential second round of payments. Treasury and IRS “constantly monitor for lessons learned.”
Treasury Secretary Steven Mnuchin said during an interview with CNBC on Monday that he expected payments to start going out the week of Dec. 28, however that was before the president pushed back on the COVID deal. “We’re definitely in a much better position and there’s no question the first bill, the CARES Act is the reason why we’re here today and the economy has continued to rebound,” he said.
The IRS and Treasury did not respond to Government Executive’s specific questions about the process.
“IRS employees are prepared to work diligently through the upcoming holidays to ensure stimulus payments are delivered as expeditiously and effectively as possible,” said Chad Hooper, executive director of the Professional Managers Association, which represents non-collective bargaining unit employees and management officials at the IRS, in a statement on Tuesday. “Having already done an initial round of payments earlier this year, assuming these payments are subject to similar or the same eligibility requirements, the IRS may be able to provide these payments more rapidly.”
Yet, he noted that employees are still dealing with “aging technology infrastructure and a lack of interagency collaboration, which makes it difficult to reach certain taxpayers.”
The worsening pandemic could also affect the agency’s response. Rettig said during a hearing on November 20 that 59,000 employees were teleworking at that time. When employees do come into offices they are using split shifts and social distancing, he added.
In an interview with Government Executive on Wednesday, Center for Taxpayer Rights Executive Director Nina Olson, who for 18 years headed the National Taxpayer Advocate, an independent organization within the IRS that helps people resolve tax problems, outlined some of the lessons the agencies and Congress learned from the first round of stimulus payments as well as some potential challenges ahead.
The bill gives the administration until January 15 to disburse the payments and if they aren't direct-deposited or mailed by then, individuals will have to wait until they file their 2020 tax returns to get their money.
“That gives the IRS a very short window to do this,” she said. However, “it's had the benefit of doing the programming, and creating relationships to get information from other agencies.” Also “Congress did remedy and clarify some of the things that cause problems” with the CARES Act implementation.
Those clarifications include giving more specifics on payments for non-tax filers (including those who receive Social Security, veterans’ benefits and supplemental security income); making it clear that spouses of U.S. citizens who have Individual Taxpayer Identification Numbers (not Social Security numbers) can receive payments for themselves and their children; stating that incarcerated individuals can get payments; denoting very specifically the process of giving payments to alternate payees (as in nursing homes or long-term care facilities); and clarifying the eligibility of deceased individuals for the payments and those under the CARES Act, Olson explained.
Given that many Americans have lost jobs or moved elsewhere to ride out the pandemic, Olson said the IRS could face significant challenges over outdated addresses and bank accounts. Also, “the Bureau of Fiscal Services can only issue so many checks at any given time and so that could pose a challenge in getting all this done before January 15.”
She also noted that there is an “extraordinary number” of 2019 tax returns the IRS hasn’t yet processed. Therefore some people won’t “get that stimulus payment early in January because there is no 2019 return and that’s very disturbing.”
Olsen believes IRS workers, especially those handling mail and processing tax returns, should get the coronavirus vaccine as soon as possible. “Why are they not designated essential frontline workers so that they can get the vaccine and we can dig ourselves out of this mess?”