COVID-19. No one has seen anything like it before and hopefully we’ll never see anything like it again. As the pandemic swept across the United States, it swept millions of people onto the unemployment rolls creating the highest level of unemployment among Americans since the Great Depression.
Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. President Trump signed it into law March 27, 2020. The Treasury Department set about the massive undertaking of sending $1200 to each qualifying American as quickly as possible using IRS records to identify who could get the stimulus payment by direct deposit and who would receive a paper check.
But in some instances, IRS records couldn’t sort out which of our citizens were still with us, and which had gone on to a bigger reward than a stimulus check. So, just like Chicago, where it’s said the dead are recognized as active voters, stimulus checks were sent to some of the nation’s dearly departed.
Estate attorneys across the country were receiving calls from executors and trustees asking what to do with the money. Should they keep it? Should they return it? Do you think the IRS would audit a closed estate over $1200? The only guidance was at the top of the envelope if a paper check was received. It said, “IF RECIPIENT IS DECEASED, check here and drop in mailbox.” Ironically, some checks were made payable to the deceased individual followed by “Dec’d” and then the name of the executor was listed below.
Finally, on May 6, 2020, the IRS made it clear—if you’re dead we want the money back! Guidelines were set out in an IRS communique titled “Economic Impact Payment Information Center.” In a lengthy list of FAQs, question 10 asks, “Does someone who has died qualify for the payment?” The answer:
A10. No. A Payment made to someone who died before receipt of the Payment should be returned to the IRS by following the instructions in the Q&A about repayments. Return the entire Payment unless the Payment was made to joint filers and one spouse had not died before receipt of the Payment, in which case, you only need to return the portion of the Payment made on account of the decedent. This amount will be $1,200 unless adjusted gross income exceeded $150,000.
Then, the hyperlink in the answer to question 10 leads you to question 52 of that same document which answers the question about how to repay a stimulus payment issued to a deceased person.
A52. 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.
- Mail the voided Treasury check immediately to the appropriate IRS location listed below.
- Don’t staple, bend, or paper clip the check.
- Include a note 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:
- Submit a personal check, money order, etc., immediately to the appropriate IRS location listed below.
- 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 checks.
In fairness, the Treasury Department pulled information from 2018 tax returns, and any 2019 returns filed before the shutdown. It was a case of speed or accuracy. In most cases you get one or the other. In this case, speed was the most important.