Stimulus check update: Deceased individuals receiving checks

The Internal Revenue Service (IRS) has already sent out nearly 90 million checks containing stimulus funds which represents funds for over half of the eligible amount of people.

But in the haste to get these checks out, it seems like there have been some mishaps.

There are many reports out there of stimulus checks being sent out to deceased individuals.

Some people who have recently deceased but still have bank accounts have apparently had funds from stimulus checks deposited into their bank accounts and the funds have been subsequently discovered by family members.

For example, Katy Dobbs of Raleigh said her deceased father’s bank account, had $1,200 dollars in stimulus funds show up unexpectedly and they are not sure what to do.

The IRS is stating to give the money back as deceased individuals were not intended to receive funds (the same thing happened last time that stimulus funds went out during the Great Recession).

Remember, checks are going out to people who filed in 2018 and 2019 and so it makes sense that many of those people are no longer with us a couple of years later.

But here’s what we don’t know though.

We don’t know exactly how those funds should be sent back and what exactly will happen if somebody decides to keep them.

Will the individual responsible for the bank account be liable to the IRS for that amount?

Some tax experts don’t believe that the IRS has authority to clawback these stimulus checks if they were erroneously sent out to deceased people.

Currently, there is a provision in the CARES Act which states that if the IRS erroneously sent you more stimulus funds than you are owed, you are not required to send those back.

As reported by 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.”

This was made in an effort so that the funds could be delivered as efficiently as possible.

So I think people who want to hold onto the funds and keep them may have a legal argument for why they should NOT be required to hand over those funds.

In the meantime, many people will likely be frustrated because they have not received their funds while deceased individuals have.

We are also awaiting more details about a possible second stimulus. It sounds like the President is not favoring that option though and as the economy begins to open back up, a second stimulus may become less of a reality.

H/T

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