Stimulus payment: some struggling Americans will not receive the money they have been promised. Here’s why

Stimulus payment: some struggling Americans will not receive the money they have been promised. Here’s why

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The problem is affecting about 8 million families who have not received the money sent directly to them, most commonly because the IRS did not have their correct information on file. Even if they are eligible, they will now have to claim it on their 2020 income tax return – and if they are required to return taxes or certain other types of debt, the IRS is discounting that from the stimulus payment.

More than a month has passed since the Taxpayer Advocate Service, an independent entity within the Federal Revenue Service, drew attention to the matter. He argued that the agency could find a way to ensure that people received the money as intended.

The issue “is a problem that the law and the IRS created,” wrote Erin M. Collins, the National Taxpayer Attorney, adding that “the rug is being pulled out of eligible individuals with outstanding debts.”

The agency is reviewing what may be possible, a spokesman told CNN this week.

However, the people who filed their 2020 tax returns may already have lost the money – and they won’t be able to get it back.

IRS rules versus what Congress wanted

Congress, which sent stimulus payments to millions of people last year and another round in December, was designed so that people who owed taxes owed could still receive the money.

In fact, legislators made it clear in the legislative text that they would still qualify. For the $ 1,200 payments authorized under the CARES Act last year, the payment was protected from all debts except defaulting child support. Congress expanded the exclusion for the second round of payments, in the amount of up to $ 600, ensuring that the money was not compensated even for the due child support.

But the situation is complicated when the taxpayer has to complain payment on a tax return – a kind of barrier to the people that the Treasury lost when sending the money. Most people received the money automatically, but many very low-income Americans who don’t normally report taxes may have lost it. People who have changed or changed their bank accounts recently may also have fallen into the hole.

The stimulus payment, however, is technically a tax credit, known as a Recovery Credit for Recovery, and some tax credits can be offset.
Those who have already received the stimulus money need not worry about getting it back. But the gap can resurface for people who are due to the expected third round of stimulus checks now being debated in Congress, which would send $ 1,400 per person.

A spokesman for the House Ways and Means Committee, which drafted this part of Covid’s relief bills, said lawmakers did not exclude tax credit from debt offsets largely due to administrative difficulties associated with exemption from a single credit.

What people can do to claim their money

As of now, people have few resources. But an existing process called compensation for deviation compensation allows people in economic difficulties to apply for an exemption so that they can still receive a full tax refund.

But it is not guaranteed and there is a small window to apply: between filling in your 2020 tax return and receiving your tax refund or invoice.

Biden’s drive to reach more people

Shortly after President Joe Biden took office, he signed an executive order directing the Treasury Department, which houses the IRS, to consider taking a series of actions to reach the millions of Americans who were eligible for stimulus payments. , but did not receive.
Most eligible adults received their money automatically. But very low-income people who usually don’t file tax returns had to go one step further and register with the IRS so the agency would know how to contact them. The IRS has created an online tool to facilitate this process and has made efforts to partner with local groups working with homeless people. Still, experts said the government could be more aggressive in these efforts.

Although the IRS is probably the most appropriate government agency for sending money to millions of Americans, it is hampered by deep budget cuts and has been tasked with delivering the first round of stimulus payments at the height of the 2019 fiscal season, when most of its employees were working from home.

Taxpayers have been having trouble contacting the agency with questions – 76% of calls have not been answered in the past year – and local Taxpayer Assistance Centers have cut off on-site services to comply with social detachment guidelines. An accumulation of 2019 paper tax returns has accumulated, delaying not only tax refunds, but also stimulus payments.

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