IRS has issued a series of frequently asked questions regarding the second economic impact payments (EIP 2s), i.e., stimulus payments provided in the Consolidated Appropriations Act, 2021. This article discusses some of the information provided in those FAQs about how individuals will receive EIP 2s, including problems individuals may have with receiving EIP 2s.
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act, PL 116-136) provided for direct payments/rebates to certain individual taxpayers. These were referred to as Economic Impact Payments (“EIP 1”). EIP 1 is actually an advance payment of a “recovery rebate credit.” (Code Sec. 6428)
Code Sec. 6428A, as added by Sec. 272 of the COVID-Related Tax Relief Act (COVIDTRA), which is part of the Consolidated Appropriations Act, 2021 (PL 116-260), provides a recovery rebate credit payable for eligible individuals, EIP 2. The recovery rebate credit is $600 per eligible individual ($1,200 for married filing jointly), and $600 per eligible child. The credit phases out starting at $75,000 of modified adjusted gross income ($112,500 for heads of household and $150,000 for married filing jointly) at a rate of $5 per $100 of additional income.
IRS is authorized to make advance payments of this credit to eligible individuals using their 2019 return information to determine their eligibility for the credit. (Code Sec. 6428A(f))
To facilitate the payment of EIP 1, IRS created an on-line tool, “Non-Filers: Enter Payment Info Here.” that individuals who don’t need to file a tax return or “non-filers” could use to register for their EIP 1s. (IR 2020-69, 4/10/2020) IRS closed this tool as of November 21, 2020. (IR 2020-230, 10/6/2020)
IRS’s “Get My Payment” (GMP) website: a) shows taxpayers either their EIP amount and the scheduled delivery date of the EIP by direct deposit or paper check, or that a payment hasn’t been scheduled; and b) allows taxpayers who did not use direct deposit on their last filed tax return to provide their direct deposit information which will speed their receipt of their EIP. See IRS creates website to help persons entitled to economic impact payments.
IRS provides information on receiving EIP 2s.
IRS has provided information about various aspects of receiving EIP 2s.
Requesting the payments. No taxpayer action is required. A payment will be issued based on the information IRS has on file for taxpayers’ 2019 tax return, the information they provided on the – no-longer-available – IRS Non-Filers tool, payment information entered on the Get My Payment tool, or information provided by a federal agency that issued benefits to them (Social Security Administration, Veteran Affairs, or Railroad Retirement Board).
The above instruction also applies to taxpayers who don’t normally file a tax return, but received the first EIP.
Receiving payments. For taxpayers that haven’t received a direct deposit yet of their EIP2, IRS notes that it updated GMP on January 5, 2021 to allow taxpayers to see if they’re receiving the second Economic Impact Payment.
If the taxpayer checked GMP on or after January 5 and:
– GMP reflects a direct deposit date and partial account information, then the payment is deposited there.
– GMP reflects a date the payment was mailed, then it may take up to three to four weeks for the taxpayer to receive the payment. The taxpayer should watch their mail carefully for a check or an EIP debit card. The EIP debit cards arrive in a white envelope that prominently displays the U.S. Department of the Treasury seal.
If IRS doesn’t have routing and account information for a taxpayer for a direct deposit, IRS will send either a check or debit card in the form of an EIP Card.
The fact that a taxpayer received an EIP Card for EIP 1 does not mean they will receive an EIP Card for EIP 2; they may receive a check. A taxpayer who received a check for EIP 1 may receive an EIP Card for EIP 2. In any case, the earlier EIP Cards will not be “reloaded.”
Problem receiving payments.
Problems, generally. Taxpayers who don’t receive an EIP 2 – or don’t receive the full amount – may be eligible to claim the recovery rebate credit when they file their 2020 Form 1040 or 1040-SR tax return.
Payment sent to a closed bank account. IRS has noted previously that it had sent some EIP 2s to now-closed temporary bank accounts that had been set up by tax return preparers and software providers to facilitate the preparers receiving their fees. See IRS is redirecting economic impact payments that went to closed accounts.
As a result of this problem, the information that a taxpayer may see in their Get My Payment tool, including account numbers and potential deposit dates, may continue to display unfamiliar account numbers as IRS continues to work through and update this issue.
The fact that a taxpayer doesn’t recognize the bank account number displayed in the Get My Payment tool does not mean their deposits were made to the wrong account or that there is a fraud. If a taxpayer does not recognize the account number, it may be an issue related to how information is displayed in the tool tied to temporary accounts used for refund loans/banking products. IRS is working to address this.
IRS says that taxpayers affected by this problem should visit IRS.gov for the most current information on EIP 2s rather than calling IRS, financial institutions or tax software providers. IRS phone assistors do not have additional information beyond what’s available on IRS.gov.
IRS also notes that due to the compressed timeline caused by the fact that IRS is preparing for the 2021 filing season, IRS is unable to reissue any payments. If a mailed payment is returned to IRS by the Post Office as undeliverable, IRS is unable to reissue the check.
Lost, stolen or destroyed payments. Taxpayer who received payment by check, and it was lost, stolen or destroyed, should request a payment trace so the IRS can determine if the payment was cashed. See “Requesting a payment trace,” below.
If a trace is initiated and the IRS determines that the check wasn’t cashed, the IRS will credit the taxpayer’s account for that payment but the IRS cannot reissue the payment.
Taxpayers who file their 2020 tax return before their trace is complete should not include the payment amount on line 16 or 19 of the Form 1040 Recovery Rebate Credit Worksheet. They may receive a notice saying their Recovery Rebate Credit was changed, but an adjustment will be made after the trace is complete and it is determined their payment has not been cashed. They will not need to take any additional action to receive the credit.
Taxpayers who do not request a trace on their payment may receive an error when claiming the Recovery Rebate Credit on their 2020 tax return. Since the payment was issued to them, they may not be eligible for any credit.
Taxpayers who have not received any payment at all should see “Requesting a payment trace,” below.
Taxpayer received Notices 1444 in the mail saying payment was issued, but taxpayer has not received my payments. Taxpayers who receive Notice 1444 (Your Economic Impact Payment) in the mail and have not received the payment as mentioned in the notice – see “Requesting a payment trace,” below.
Requesting a payment trace. If Get My Payment or Notice 1444 shows a payment was issued as a direct deposit more than 5 days after the payment date, the taxpayer’s first step is to check with their bank and make sure they didn’t receive a deposit. Do not check with the bank prior to 5 days because they may not have any information.
Taxpayers should only request a payment trace to track their payment if they received Notice 1444 or if Get My Payment shows the payment was issued and they have not received it within the timeframes below. IRS assistors cannot initiate a payment trace unless it has been:
• 5 days since the deposit date and the bank says it hasn’t received the payment
• 4 weeks since the payment was mailed by check to a standard address for the first EIP; after February 24, 2021 for EIP 2
• 6 weeks since the payment was mailed, and the taxpayer has a forwarding address on file with the local post office for the first EIP; March 10, 2021 for EIP 2
• 9 weeks since the payment was mailed, and the taxpayer has a foreign address for the first EIP; March 31, 2021 for EIP 2
Taxpayers who have a foreign address: there may be international service disruptions at the United States Postal Service (USPS) or the foreign country they are in due to the COVID-19 pandemic.
To start a payment trace:
• Call IRS at 800-919-9835
• Mail or fax a completed Form 3911, Taxpayer Statement Regarding Refund.
The IRS webpage provides Form 3911 instructions. It also provides fax numbers and addresses, which depend on the taxpayer’s state of residence.
To continue your research on information on EIP 2, see FTC 2d/FIN ¶A-4430.
Subscribe to our Checkpoint Daily Newsstand email to get all the latest tax, accounting, and audit news delivered to your inbox each weekday. It’s free!