Mnuchin wants stimulus checks sent to dead people returned. Can he do that?
Dead people are getting stimulus money — but their relatives should hold off on cashing them in.
The Internal Revenue Service hasn’t yet issued instructions on its website for economic impact payments sent in error to the deceased. U.S. Treasury Secretary Steven Mnuchin, however, told the Wall Street Journal they should send the $1,200 payments back to the federal government.
“You’re not supposed to keep that payment,” Mnuchin said, according to the 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.”
A Treasury Department spokesperson later told CNBC they “will be issuing guidance on this shortly.”
The first round of stimulus checks from the Coronavirus Aid, Relief, and Economic Security Act — also known as the CARES Act — hit bank accounts in mid-April.
Around the same time, relatives of the deceased noticed direct deposits showing up in their loved ones’ bank accounts, McClatchy News reported.
“Will they want the $1,200 back?” a widow whose husband died last year asked on Twitter after she received the full $2,400 payment for married couples.
Mnuchin says yes, but some tax experts disagree.
Adam Markowitz, a tax-preparer in Florida, said he didn’t read the CARES Act as including a “clawback” provision that would allow the IRS to take back funds “mistakenly sent to dead people,” MarketWatch reported.
“It’s going to take an act of the IRS to put in a clawback method,” he told MarketWatch.
Something similar happened in 2009 when the Obama Administration accidentally issued close to 72,000 stimulus checks to the deceased, according to a 2010 audit by the Office of the Inspector General and the Social Security Administration.
More than half were eventually returned, The Wall Street Journal reported.
It wasn’t immediately clear this go-around if that will be an eventuality.
Nicole Kaeding, vice president of policy promotion at the National Taxpayers Union Foundation, said the IRS hasn’t clarified what will happen if money sent in error isn’t returned, the Today show reported.
“If you don’t pay it back, will the IRS actually try to audit you or reclaim the money?” she told the show. “That doesn’t seem likely. It seems hard to imagine that the IRS will be auditing widows over checks like these.”
In the meantime, Jennifer Benda, a shareholder at the law firm Hall Estill in Denver, said not to spend it.
“Don’t plan on keeping it free and clear. Wait till we get more guidance,” she told Today. “Don’t cash the check, or just set it aside in a separate bank account so you don’t spend it — whatever you need to do in case you need to pay it back. But I do think for people filing 2020 tax returns, this will get sorted out next April.”
This story was originally published May 5, 2020 at 12:08 PM with the headline "Mnuchin wants stimulus checks sent to dead people returned. Can he do that?."
