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My deceased parent received a COVID-19 Economic Stimulus Payment. Do I have to return it?

by | May 7, 2020 | Elder Law, Probate

The NEW correct answer to this question is YES.

One of the most frustrating aspects of the federal response to the financial hardships faced by many Americans as a result of the coronavirus pandemic is the lack of guidance available from Federal authorities. COVID-19 Economic Impact Payments (EIP) were issued based upon 2018 income tax, Social Security, SSI, disability or VA records, so the Internal Revenue Service issued Payments to persons who died between 2018 and today.

Most tax and benefit professionals agreed that EIPs made to deceased persons who were otherwise eligible for the EIP did not have to be returned, relying upon language in the enabling legislation negating liability for erroneous payments. However, on May 6, 2020, the IRS added Question 10 (Q10) to FAQs on its website [www.irs.gov] proclaiming that

“[a] Payment made to someone who died before receipt of the Payment should be returned to the IRS.”

Instructions for returning an EIP state that a paper check (if not endorsed or negotiated) should be voided and mailed to the Internal Revenue Service at a regional Refund Inquiry Unit with a note “stating the reason for returning the check.” If the EIP was paid via direct deposit or the paper check had been deposited, then mail a check or money order for the EIP amount payable to the U.S. Treasury with the social security number of the recipient, the words “2020EIP”, and the reason for returning the check to a regional Refund Inquiry Unit.

While the FAQ uses the word “should” instead of “shall” and states no deadline for returning Payments, it says to take these actions “immediately.”

For assistance with your tax, benefit, probate, or estate questions, call Akin Law PA at 386-271-4740.