Some individuals are unexpectedly and incorrectly receiving coronavirus stimulus checks, but can they keep them if they aren’t supposed to receive them? At this point, it’s unclear.
President Trump has said that the IRS will “get that money back,” but he has not specified, when, how or if that will truly happen.
Nicole Kaeding, an economist and vice president of policy promotion at the National Taxpayers Union Foundation, has said that individuals do not need to pay the money back if they receive too much. She tells MarketWatch, “An important provision of the [Coronavirus Aid, Relief, and Economic Security] 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.”
Trump Says “We’ll Get That Back”
In late March, lawmakers passed the CARES Act in an attempt to ease Americans’ financial troubles amid the coronavirus. Included in the CARES Act is a one-time, $1,200 stimulus payment to millions of Americans.
More than 85 million Americans have received those payments to date, and more are expected to be sent out through September. However, a number of payments have been issued to people who are either ineligible, deceased or simply don’t qualify.
Perhaps this isn’t surprising. As the Washington Post noted, “The urgency to get funds to 150 million Americans has resulted in payment mishaps and technological glitches.”
On May 1, The Washington Post reported that Elizabeth B., a British woman who “asked that her last name not be used for fear of backlash,” learned in mid-April that she had somehow received a direct deposit from the IRS for $1,200.
In an interview with the outlet, Elizabeth said, “I was totally shocked. I never for a minute thought it was a possibility that I would get this money. I’m a rich foreigner getting American money. I don’t deserve this money. There are so many people in America who need it. I appreciate that the IRS had to get the money out fast so they couldn’t do thorough checks. But it just feels so wrong to have it in my account.”
Elizabeth did work for two years in New York as a communications consultant. While she only worked for a few months in 2018 before moving back to Britain, the Washington Post reported that she would have made well beyond the $99,000 individual cap for a stimulus payment had she stayed for the full year.
Since Elizabeth was unable to reach anyone at the IRS to return the payment, she personally reached out to the Washington Post, worried that others were experiencing the same problem. “I cannot possibly be the only nonresident getting this payment,” she said.
During an April press briefing, Trump said that the IRS would “claw back” some payments, but did not specify when, who or how they would do that.
“Sometimes you send a check to somebody wrong,” Trump said during an April 17 coronavirus task force press briefing. “Sometimes people are listed, they die, and they get a check. That can happen. … We’ll get that back.”
A Number of Deceased Individuals Are Receiving Stimulus Checks
A number of stimulus checks have also been sent to people who have died.
If an individual filed taxes in 2018 or 2019 and has since died, they will likely receive a stimulus check.
In a statement, Kaeding told Today, “The Social Security administration has a master file of all deaths in the United States, but if the IRS had taken the time to cross-reference that date, it would have delayed checks for everyone for weeks.”
Treasury Secretary Steven Mnuhcin told The Wall Street Journal that “heirs should be returning that money.”
However, tax preparer Adam Markowitz and other tax experts tell MarketWatch that it appears survivors can keep the money. “There is nothing that the IRS has that is preventing someone who is deceased from receiving this money.”
Although Trump said the IRS will “get back” money that has been wrongly sent, the CARES Act stimulus bill, according to MarketWatch, contains a “no clawback” provisions for stimulus checks sent to a dead person — that means the agency cannot take back the money after its been handed out.
And as The Motley Fool pointed out, “Right now, chasing that money down is unlikely, and the government may only succeed in reclaiming payments when there’s evidence of deliberate fraud.”