Lawmakers, tax policy experts and advocates for retirees are outraged over new IRS guidance that indicates seniors will need to file tax returns to receive their coronavirus checks.
The $2.2 trillion coronavirus relief bill President Trump signed into law last week lets the IRS look at Social Security benefit statements in order to give people their rebate checks if they haven’t filed 2018 or 2019 tax returns.
But the IRS on Monday said some seniors and others who don’t typically file returns will need to do so if they want their check.
Lawmakers and groups are now pressing the administration to find a way for Social Security beneficiaries to automatically receive their payments so that they don’t face any extra burdens.
“We strongly urge you to ensure that economic stimulus payments are automatically sent to vulnerable seniors and individuals who experience disabilities, without these individuals needing to file a tax return,” more than three dozen Democratic senators, led by Sens. Maggie Hassan (N.H.) and Sherrod Brown (Ohio), wrote in a letter Wednesday to Treasury Secretary Steven Mnuchin and Social Security Commissioner Andrew Saul.
Concerns about whether seniors will have to file tax returns to get their rebates are also coming from some Republicans.
“Despite language Congress passed in #COVIDー19 relief bill to ensure Social Security beneficiaries would NOT have to file taxes to receive direct relief, IRS issued guidance saying seniors DO have to file taxes,” Sen. Josh Hawley (R-Mo.) tweeted. “That’s ridiculous.”
“During this unprecedented time of need, requiring seniors to go through the confusing and laborious tax return filing process before receiving desperately-needed stimulus checks is unacceptable,” Rep. Elise Stefanik (R-N.Y.) said in a statement.
When asked about the hurdle at Wednesday’s coronavirus task force press briefing, Trump said: “It’s a process that they’re working on. We’ll get back to you as soon as we find out.”
The new coronavirus relief law, known as the CARES Act, includes one-time direct payments of up to $1,200 per adult and $500 per child.
Mnuchin said last week that people who have provided direct deposit information to the IRS should expect to receive their payments “within three weeks.”
Eligible recipients who have filed a tax return for 2018 or 2019 are expected to automatically receive their payments.
The IRS said in a question-and-answer document Monday that “people who typically do not file a tax return will need to file a simple tax return to receive an economic impact payment.”
“Low-income taxpayers, senior citizens, Social Security recipients, some veterans and individuals with disabilities who are otherwise not required to file a tax return will not owe tax,” the agency said.
The IRS added that it will soon release information about how those individuals can file “a 2019 tax return with simple, but necessary, information including their filing status, number of dependents and direct deposit bank account information.”
A number of stakeholders were troubled by the IRS guidance, since the text of the CARES Act authorizes the agency to look at nonfilers’ Social Security and railroad retirement benefit statements. Social Security benefit statements provide information about the retirement and disability benefits people receive through the program.
Tax policy analysts said they hope the IRS issues further guidance that provides more clarity.
“My hope is that the initial guidance was improperly written,” said Nicole Kaeding, a vice president at the right-leaning National Taxpayers Union Foundation. “The statute does not require that Social Security beneficiaries file a return to qualify, and requiring a return would simply bog down the process.”
A Treasury Department spokesperson said the agency is looking into the issue and hopes to have more information in the coming days.
A separate question-and-answer document released last week by the office of Senate Finance Committee Chairman Chuck Grassley (R-Iowa) — a key author of the rebate provision — said that while the bill gives the IRS the ability to base direct payments on Social Security statements, “seniors are still encouraged to file their 2019 tax return to ensure they receive their recovery rebate as quickly as possible.”
“The legislation was written to give the IRS flexibility to deliver recovery checks as soon as possible,” Grassley spokesman Michael Zona said Wednesday. “It is up to the IRS to implement the law as quickly and effectively as it can.”
Tax experts and advocates for Social Security recipients said the government already has information it can use to get the payments to seniors, since people receive their Social Security benefits electronically, through debit cards or direct deposit.
They also said it would be challenging for seniors to file tax returns right now because they may not have internet access, and many sites that provide free tax-filing assistance for low-income and elderly people are closed because of the coronavirus pandemic.
“Why is the burden being placed on American citizens, rather than our government?” asked Nancy Altman, president of the advocacy group Social Security Works.
Richard Fiesta, executive director of the Alliance for Retired Americans, said that while the IRS is saying seniors would need to file a simple return, the simplicity of the form would be “in the eye of the beholder.”
Seth Hanlon, a senior fellow at the left-leaning Center for American Progress, said that “it just seems like an extraordinarily bad idea to tell people to go out in the world and perform a task to claim the money that they’re entitled to.”
House Ways and Means Committee Chairman Richard Neal (D-Mass.) on Tuesday urged tax preparation companies in the Free File Alliance to work with the IRS to provide assistance to nonfilers who are eligible for a rebate.
Free File Alliance Executive Director Tim Hugo said in a statement that “Free File members are working hard to help the IRS and Chairman Neal develop the simplest and quickest method to get funding to Americans at this critical time.”
The IRS said the simple tax returns it wants nonfilers to submit will ask people for information such as their tax-filing status and number of dependents.
The rebate amounts phase out for single filers with more than $75,000 of income and married couples filing jointly with more than $150,000 of income. Households with children are entitled to additional money.
Nina Olson, executive director for the Center for Taxpayer Rights and the former in-house IRS watchdog, said most people who receive Social Security benefits are well below the phase-out amount regardless of their filing status. She also said the IRS could automatically provide Social Security recipients with $1,200 and then ask those with children to file returns to receive the additional $500 per child.
Olson called the IRS guidance “very disturbing,” and said she thinks it’s “running counter to what Congress intended.”
She said that when taxpayers were required to file returns in order to receive rebates in 2008, many people who weren’t normally required to file returns never did so and didn’t end up claiming their payments.
“We know this was incredibly confusing to this population in 2008,” she said.
Updated at 8:04 p.m.