Under the Coronavirus Aid, Relief and Economic Security (“CARES”) Act, the majority of Americans received Economic Impact Payments commonly referred to as “Stimulus Checks.” In an effort to get these payments out to citizens as quickly as possible, the IRS used prior year tax return data (from the 2019 if it had already been filed, otherwise, data from the 2018 return) to decide whether someone was eligible to receive a check in 2020. Sadly, many who appeared eligible based on their 2018 or 2019 tax returns died before the checks were issued. The unfortunate result is that their loved ones may have received checks for their departed relatives.
This, of course, lead to questions as to whether the decedent’s estate or relatives could cash the checks themselves. There were many news stories on the topic (one from CBS 58 in Milwaukee featuring yours truly). The IRS ultimately advised that checks issued to deceased persons should be returned to the IRS.
The government has now gone one step further to address the issue. In the IRS’ online Economic Impact Payment Information Center the IRS provides a series of FAQs about the payments. Earlier this week, they updated FAQ 13 and explained that they have now cancelled any unreturned checks that had been issued to the deceased. This means that you no longer have to go through the process of returning the check.
Some of the Economic Impact Payments, however, were not paid by check. Rather, if the historical tax return information included a direct deposit instruction, the money may have been directly deposited into the bank account of a decedent (if the account had not yet been closed). In such cases, you are still expected to return the payment by following the procedures in FAQ 65.
Rob Teuber is a tax attorney with the law firm von Briesen & Roper s.c. He works with individual and business clients across the U.S. to resolve their Federal tax issues. He also works with Wisconsin taxpayers to resolve issues with the Wisconsin Department of Revenue from his offices in Milwaukee and Waukesha, Wisconsin.