In May, the Internal Revenue Service (IRS) issued guidance about how to return an Economic Impact Payment (EIP) or stimulus check. They were targeting, among others, decedents and incarcerated persons, even though there is no clawback provision in the CARES Act.

Initially, IRS spokesman Eric Smith told the Washington Post in April that “the payments may not have to be returned depending on the circumstances. However, a week after Smith made his comments to the Washington Post, Treasury Steven Mnuchin told the Wall Street Journal that decedent’s checks should be returned. 

And on May 6, the IRS added the following FAQ answer on its website:

A Payment made to someone who died before receipt of the Payment should be returned to the IRS by following the instructions 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. 

Apparently, those checks weren’t getting returned as quickly as the IRS wanted. On July 10, the IRS updated its FAQs to say:

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 to the decedent. This amount will be $1,200 unless adjusted gross income exceeded $150,000. If you cannot deposit the Payment because it was issued to both spouses and one spouse is deceased, return the check as described in Returning the Economic Impact Payment section on this page. Once the IRS receives and processes your returned Payment, an Economic Impact Payment will be reissued.

That sounds like what they offered before, except that they added this bit:

The Bureau of Fiscal Services has canceled outstanding Economic Impact Payment (EIP) checks issued to recipients who may not be eligible, including those who may be deceased. Recipients should still return these checks as described in Returning the Economic Impact Payment section on this page.

To be clear, the BFS is stopping Payment on those uncashed checks. Other taxpayers have reported to me that payments which have been deposited into existing bank accounts have also been reversed.

The message: Apparently, this really, really matters to the IRS. I would argue – from my email – that they’re not putting this kind of effort into getting checks into the hands of live taxpayers, but they are pursuing decedents. Be aware.

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Author

Kelly Erb is a tax attorney, tax writer and podcaster.

3 Comments

  1. Thomas Eccles Reply

    My wife passed away February 8th 2020 and they have taken back the 1200 she should have received is that right even though she just passed away this year and we filed joint 2018 and 2019 why would they take her pymt back

    • Sadly, I have no good answer for you. The IRS (and apparently now, the Senate) have decided this makes sense.

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