Men hands holding a US Government Treasury check

IRS Provides Guidance on Payments Received by Deceased Individuals, and More

On May 6th, the IRS updated its FAQs related to the Economic Impact Payments, found at the Economic Impact Payment Information Center, to clarify that deceased individuals do not qualify for the payments. The FAQs also indicate that individuals who are incarcerated do not qualify for the payment, a limitation that is not found in the text of the CARES Act. The IRS further clarified that individuals who are nonresident aliens in 2020 do not qualify, even if they are resident aliens during 2019. It should be noted that FAQs that are not officially published and are only available on the IRS website, are not a legal authority and can be changed at any time. Many times these FAQs are not reviewed and are not the official position of the IRS. As such, this information should be used as a guide only to provide insight into the position that the IRS may decide to take, and should generally not be officially relied on by taxpayers. With that said, the IRS is encouraging individuals who received payments that should not have been made to return the payments. How the payment is to be returned depends on how the payment was received: Received by Check and Not Cashed: If the check has not been cashed yet, individuals should write “VOID” in the endorsement section of the check and then mail it back to the IRS, along with a note indicating the reason for returning the check. The mailing address can be found on the FAQ page, linked above. Received by Direct Deposit or Check Cashed: If the payment was received directly into an individual’s bank account, or the check received was cashed, then the IRS is requesting individuals to write a personal check or money order made payable to “U.S. Treasury” and mail it to the IRS. Individuals should write “2020EIP” and the recipient’s social security number or tax identification number on the face of the check and should include a note indicating the reason for the payment. Again, the mailing address can be found on the FAQ page, linked above. The FAQs do not address how the IRS plans to enforce repayment of the Economic Impact Payments, or how they will recover payments if the payments have already been spent. Please contact your HBK advisor if you would like to discuss what this guidance means to your specific situation. As always, we will continue to keep you informed on any new developments

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About the Author(s)

Amy is a Principal and the Chair of the Tax Advisory Group at HBK CPAs & Consultants. The Tax Advisory Group is a group of highly specialized professionals who provide tax training to our team members, oversee compliance with tax policies in order to mitigate risk to the firm, and provide tax planning and consulting services for our clients.

Amy is the Co-National Director of the Nonprofit Solutions group. She also leads the HBK's diversity and inclusion initiative.

Amy specializes in estate, gift, trust, individual, and nonprofit taxation. She is skilled at researching complicated tax issues, consulting on complex estate plans, and providing guidance for our clients to ensure they are in compliance with their tax filing responsibilities.

Amy enjoys sharing her knowledge and passion for tax planning with clients and other professionals. She is a frequent speaker at bar association and estate planning council events, and has authored many articles discussing tax planning techniques and compliance issues.

Hill, Barth & King LLC has prepared this material for informational purposes only. Any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or under any state or local tax law or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Please do not hesitate to contact us if you have any questions regarding the matter.