Return stimulus payment paid to decedent required ?

[RWG1950]

Still having trouble understanding the procedure on this.
Spouse (MFJ in 2018 & 2019) died in Feb 2019.
They received a $ 2,400 stimulus payment in 2020.
It seems that the deceased spouse may not have been entitled to the $ 1,200.
The wife wants to pay the $1,200 back.
Think she has to ? If yes - how & where to return the $ 1,200.
Appreciate any comments.

[Uncle Sam]

Here's the link - see question 12 https://www.irs.gov/coronavirus/econ...rmation-center
Mailing address depends on which state the taxpayer lived and filed returns

[Rapid Robert]

No,it does not need to be paid back.

"“IRS counsel subsequently determined that IRS did not have the legal authority to deny payments to those who filed a return in 2019, even if they were deceased at the time of payment,” GAO said."

https://www.politico.com/news/2020/06/25/irs-stimulus-checks-dead-people-339530

[Uncle Sam]

The article referred to above was written 6/25/2020, yet Question 12 on IRS's site was posted 07/10/20.

[Rapid Robert]

The article referred to above was written 6/25/2020, yet Question 12 on IRS's site was posted 07/10/20.

But the law did not change between those two dates. The legal conclusion therefore also does not change.

[Uncle Sam]

What are taxpayers whose family member already returned the funds for the deceased person when the earlier instructions and policy was different? Request that IRS return it? And if so - how?

[New York Enrolled Agent]

What are taxpayers whose family member already returned the funds for the deceased person

Probably saying something like "that was dumb of me to send the money back."

[Uncle Sam]

I recognize that in looking back now - you can think that -but at the time the Stimulus Payment was received, plenty of family members were looking for guidance on what t o do - and then FAQ provided IRS guidance on what to do and where to send it based on state of residence. Then to be compliant, followed that policy. Taxpayers can't help it when the government continually changes its mind in midstream, after it has already established a policy. Where is there guidance now on how to obtain that money back?

[New York Enrolled Agent]

FAQs are not policy. FAQs are informal guidance. They do not constitute authority.

If these taxpayers were your clients they should have come to you. A reading of the CARES Act ( section 2201) shows there is no restriction that deceased taxpayers were ineligible. The statute controls - not FAQs.

[dtlee]

The article referred to above was written 6/25/2020, yet Question 12 on IRS's site was posted 07/10/20.

If we want to start saying who said what first or last, the IRS first started taking their position (in the FAQs) on May 6 when they first started telling taxpayers (in Question 10 at the time) to return the funds (with an invalid address for the service center in Andover, MA) and articles started appearing almost immediately saying the IRS had no firm ground in demanding the repayments. More recent articles and commentaries are attacking the fact that they are now denying payments to those who they know died prior to issuing the checks. Any tax professional who advised clients to return the checks should have already had a backup plan for requesting them again if the IRS position is wrong.

[Rapid Robert]

Taxpayers can't help it when the government continually changes its mind in midstream, after it has already established a policy.

No, but voters can. We didn't have this problem the last time an advance credit based on a prior year was issued ([edit - see my following post]). The administration followed the law and issued the checks as required, including to decedents.

What is ironic is that the same tax pros who have no problem helping taxpayers get out of paying taxes that they ACTUALLY OWE decided in this case to roll over and tell clients to just pay whatever the IRS said to pay.

https://www.theonion.com/heaven-flus...nds-1844165406

[TAXNJ]

Treasury Inspector General for Tax Administration

Making Work Pay Credit Was as Implemented As Intended by the Congress, but Resulted in Many Taxpayers Owing Taxes With Their Returns

https://www.treasury.gov/tigta/audit...01141002fr.pdf

[Rapid Robert]

Oops. Thank you TaxNJ for posting that, I realize I was referencing the wrong credit (not the one I meant to illustrate my comment).

Rather than the MWP credit, I was talking about the one before that, which was the model for implementation of the 2020 EIP (advance credit). Here is a brief reference from Pub 17 of the year in question describing the credit I intended to reference..

"Recovery Rebate Credit
This credit is figured like the economic stimulus payment you may have received in 2008 except that your 2008 tax information is used to figure this credit. Your 2007 tax information was used to figure your economic stimulus payment.

Credit reduced or eliminated by economic stimulus payment.
Your credit is reduced by any economic stimulus payment you received in 2008. However, if your credit is less than the stimulus payment you received, you do not have to repay the difference."

[Scarecrow]

No,it does not need to be paid back.

"“IRS counsel subsequently determined that IRS did not have the legal authority to deny payments to those who filed a return in 2019, even if they were deceased at the time of payment,” GAO said."

https://www.politico.com/news/2020/0...-people-339530

Politico is just that...a political opinion website.

Yes, the actual law does say that a deceased individual does not qualify for the payment [Subtitle B, Section 2201(d)(3)] (which says an estate does not qualify for the payment). A deceased individual is an estate for income tax purposes, regardless of whether or not the estate has to be probated. Thus, since an estate does not qualify for the payment under the law, then under the law, a person who receives such payment on behalf of a deceased individual would be illegally cashing the payment on behalf of the estate of the decedent.

It is no different than if a nonresident alien received a payment or a dependent received a payment and then tried to claim he or she does not have to return it.

[Rapid Robert]

Politico is just that...a political opinion website.

Yes, the actual law does say that a deceased individual does not qualify for the payment [Subtitle B, Section 2201(d)(3)].

Politico the publication has nothing to do with it. It is the IRS Counsel, along with former Taxpayer Advocate Nina Olson and numerous other authorities who back this up.

2201(f)(1) says, "each individual who was an eligible individual for such individual’s first taxable year beginning in 2019 shall be treated as having made a payment against the tax imposed by chapter 1 for such taxable year in an amount equal to the advance refund amount for such taxable year." Later, it states that tax year 2018 is substituted for 2019 if 2019 not yet filed.

The person who filed a 2019 (or 2018) return as an eligible individual is eligible.The fact that they may have become an ineligible individual in 2020 is irrelevant to the way the law was written. Further, the IRS has no legal authority to take the money back or penalize anyone for not returning it. And they are not going to do anything about in the end other than publish the (inaccurate) FAQ.