Yes, the IRS has issued guidance confirming that deceased individuals are not eligible for economic impact payments (EIPs) and explaining how to return EIPs.
According to the guidance, an EIP made to someone who died before receiving it should be returned to the IRS. In the case of a joint EIP made to a deceased individual and their spouse, the surviving spouse needs to return only the portion of the payment made to the deceased spouse. If the EIP was sent by paper check, the person returning the check should write “void” in the endorsement section and send it to the designated IRS office (the Philadelphia IRS office for Illinois). The IRS then will reissue the EIP in the appropriate amount to the surviving spouse.
If an EIP check has already been cashed, or if an EIP was sent through direct deposit, the EIP may be returned by sending a personal check or money order to the appropriate IRS office, payable to the U.S. treasury with “2020EIP” and the deceased individual’s taxpayer identification number written on the check or money order, with a brief explanation of the reason for return.
Additionally, we note that you should process economic impact ACH payments directed to deceased individuals’ accounts as you would any other tax refund payments (the economic stimulus payments are structured as tax refunds), based on guidance from Treasury officials in a recent “Ask the Fed” webinar.
For resources related to our guidance, please see:
- IRS, Economic Impact Payment Information Center (“Q10. Does someone who has died qualify for the Payment? . . . No. A Payment made to someone who died before receipt of the Payment should be returned to the IRS by following the instructions in the Q&A about repayments. Return the entire Payment unless the Payment was made to joint filers and one spouse had not died before receipt of the Payment, in which case, you only need to return the portion of the Payment made to the decedent. This amount will be $1,200 unless adjusted gross income exceeded $150,000. If you cannot deposit the payment because it was issued to both spouses and one spouse is deceased, return the check as described in question 54. Once the IRS receives and processes your returned payment, an Economic Impact Payment will be reissued.”)
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IRS, Economic Impact Payment Information Center (“Q54. What should I do to return an Economic Impact Payment (EIP)? . . . You should return the payment as described below.”
If the payment was a paper check:
1. Write “Void” in the endorsement section on the back of the check.
2. Mail the voided Treasury check immediately to the appropriate IRS location listed below.
3. Don't staple, bend, or paper clip the check.
4. Include a brief explanation stating the reason for returning the check.
If the payment was a paper check and you have cashed it, or if the payment was a direct deposit:
1. Submit a personal check, money order, etc., immediately to the appropriate IRS location listed below.
2. Write on the check/money order made payable to “U.S. Treasury” and write 2020EIP, and the taxpayer identification number (social security number, or individual taxpayer identification number) of the recipient of the check.
3. Include a brief explanation of the reason for returning the EIP.
For your paper check, here are the IRS mailing addresses to use based on the state: . . .”)
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Ask the Fed Webinar, Economic Impact Payments Disbursements Update: Information for Financial Institutions (April 30, 2020)
- Wall Street Journal, Stimulus Checks Sent to Dead Relatives Should Be Returned, Mnuchin Says (April 28, 2020) (“Deceased people aren’t eligible for the $1,200 stimulus payments some of them have been getting, and their relatives and estates should pay the money back to the government, Treasury Secretary Steven Mnuchin said Tuesday. ‘You’re not supposed to keep that payment,’ Mr. Mnuchin said in an interview with The Wall Street 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.’”)
- IRS, Economic impact payments: What you need to know (“Eligible taxpayers who filed tax returns for either 2019 or 2018 will automatically receive an economic impact payment of up to $1,200 for individuals or $2,400 for married couples and up to $500 for each qualifying child.”)
- CARES Act, Section 2201, Recovery Rebates for Individuals (“(a) IN GENERAL. In the case of an eligible individual, there shall be allowed as a credit against the tax imposed by subtitle A for the first taxable year beginning in 2020 an amount equal to the sum of (1) $1,200 ($2,400 in the case of eligible individuals filing a joint return), plus (2) an amount equal to the product of $500 multiplied by the number of qualifying children (within the meaning of section 24(c)) of the taxpayer.
(b) TREATMENT OF CREDIT. The credit allowed by subsection (a) shall be treated as allowed by subpart C of part IV of subchapter A of chapter 1 [Refundable Credits].
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(f)(1) Subject to paragraph (5), 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.”)
- Treasury Rules, 31 CFR 240.15(a) (“Handling of checks when an executor or administrator has been appointed.
(1) An executor or administrator of an estate that has been appointed in accordance with applicable State law may indorse checks issued for the following classes of payments the right to which under law does not terminate with the death of the payee: payments for the redemption of currencies or for principal and/or interest on U.S. securities; payments for tax refunds; and payments for goods and services. . . .
(2) An executor or administrator of an estate may not indorse a check issued for any class of payment other than one specified in paragraph (a)(1) of this section. Other checks, such as recurring benefit payments and annuity payments, may not be negotiated after the death of the payee. Such checks must be returned to the certifying agency for determination as to whether, under applicable law, payment is due and to whom it may be made.”)
- Treasury Rules, 31 CFR 240.15(b) (“Handling of checks when an executor or administrator has not been appointed. If an executor or administrator has not been appointed, all checks issued to a deceased payee must be returned to the certifying agency for determination as to whether, under applicable law, payment is due and to whom it may be made.”)
- Nacha Pandemic-Related FAQs (April 24, 2020) (“How should the RDFI handle an Economic Impact Payment to the account of a deceased customer? While the U.S. Treasury has not publicly addressed this question, it is Nacha’s understanding that the IRS has screened the Economic Impact Payments for eligibility. Since the payments are considered tax refunds, Nacha believes they are not subject to U.S. Treasury reclamations. Nacha believes that RDFIs can rely solely on the account number in posting the entry.”)
- Nacha Pandemic-Related FAQs (April 24, 2020) (“Economic impact payments will be formatted identically to any other IRS ACH tax refund credit entry (including an individual’s Social Security Number). . . If an RDFI becomes aware that a payment was misdirected to a wrong account, either by an accountholder, a government agency, or through its own research, it is required to notify the sending agency. Notification could be through proper return of the ACH entry or by contacting the agency. If it deems possible, the RDFI may make an internal correction and provide the agency with an NOC; however, the RDFI is liable for the corrected information.”)
- Nacha Pandemic-Related FAQs (April 24, 2020) (“As these payments will be indistinguishable from any other IRS tax refund credit, RDFIs that are participants in the IRS Refund Return Opt-In Program may utilize the opt-in program rules to return potentially erroneous or questionable payments for up to 60 calendar days using Return Reason Code R17.”)