The Internal Revenue Service has been sending some stimulus checks to dead people, and now it wants its money back.
“A payment made to someone who died before receipt of the payment should be returned to the IRS,” the federal tax collector said this week, outlining how relatives of deceased check recipients can return the money.
This is happening because the IRS is sending out checks to people who filed taxes in 2018 or 2019. The problem is, some of the people on those tax returns have since died.
If the stimulus money went to a married couple, the feds only want the money that was issued to the deceased. In other words, if a couple received $2,400, the surviving spouse just needs to return $1,200.
The instructions the IRS released Wednesday don’t say whether people will face consequences if they fail to return stimulus money sent to dead relatives. The IRS did not respond immediately to a request for comment on possible penalties.
Here’s how to return a dead loved one’s stimulus money:
• If the payment came in a paper check, surviving relatives should write “void” on the back of the check’s endorsement section and mail it back to the IRS, according the IRS directions (see Q41). They should include a note explaining the reason for the return, but they shouldn’t staple, bend or attach the check with a paper clip, the IRS said. The mailing addresses for the IRS vary depending on the state. More information on addresses can be found here.
• If the payment came via direct deposit, or if someone already cashed the money, the IRS says the money can be returned through a check or money order. The same addresses mentioned above apply. The IRS says people should make their check or money order out to “U.S. Treasury.” They should also write on the note “2020EIP” as well as the Social Security number or taxpayer identification number of the check recipient. They should include a quick note explaining the reason for the return.
• The same return instructions apply if a check recipient is incarcerated or if they are a “non-resident alien,” according to the IRS. Green card holders, formally dubbed “legal permanent residents” are entitled to the payment.
The return instructions come after Treasury Secretary Steven Mnuchin said that surviving relatives needed to send the money back if they got a stimulus check intended for a dead loved one.
“You’re not supposed to keep that payment,” Mnuchin told the Wall Street Journal. “We’re checking the databases, but there could be a scenario where we missed something, and yes, the heirs should be returning that money.”
Tax experts previously told MarketWatch that their interpretation of the CARES Act — the $2.2 trillion bill that created the stimulus payments — was that relatives didn’t have to return stimulus payments sent to dead people.
Adam Markowitz, a Leesburg, Fla.-based tax preparer, had two clients who received stimulus checks for dead relatives. In one instance, a surviving husband got a paper check for himself and one for his dead wife. A notation on the check for the wife said “deceased,” Markowitz said.
“And yes, the check did clear,” he added.
In Markowitz’s and other tax experts’ reading of the legislation, the CARES Act did not include a provision allowing the IRS to take back stimulus payments mistakenly sent to dead people, also known as a “clawback” provision.
The stimulus checks — $1,200 to individuals making less than $75,000 and $2,400 to married couples making under $150,000 — are part of the $2.2 trillion stimulus bill passed last month to inject cash into an economy faltering under the coronavirus outbreak.
The top priority of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was getting cash out quickly, even if it meant sacrificing some accuracy, according to Nicole Kaeding, an economist and vice president of policy promotion at the National Taxpayers Union Foundation, a right-leaning tax think tank.
Kaeding previously told MarketWatch that Mnuchin’s comments “surprised me a bit, given that the CARES Act included language that covers clerical mistakes by the IRS.”
Kaeding noted, “An important provision of the CARES Act, as it relates to these checks, is that if the IRS sends you too much money, you do not need to pay it back. It is considered a clerical or math error on behalf of the IRS. And that’s important because they were trying to issue these checks quickly.”
Kaeding said she’s curious to see how enforcement shakes out, as well as whether the IRS will try to assess penalties if relatives don’t return the money.
This story was originally published on April 30 and has been updated.