Millions wait for virus relief checks in major test for IRS

The IRS has started to issue coronavirus rebates to tens of millions of people but faces challenges in getting the payments to everyone.

Treasury Secretary Steven Mnuchin said Wednesday that more than 80 million Americans have already received their payments via direct deposit. But millions of people who haven’t previously given the IRS their bank information, or who may not typically file tax returns, are still waiting.

The IRS has taken steps in recent days to help facilitate getting the payments to people, but challenges remain in getting the payments to every eligible taxpayer in a prompt fashion. 

Challenges include ensuring that low-income people get their payments and addressing the concerns of taxpayers who are struggling to use IRS web tools or who say they have not yet received their payments or received incorrect payment amounts.

“The easy part is the direct deposit payments, and the IRS deserves high grades for what they’ve done so far,” said Mark Everson, vice chairman of alliantgroup, who served as IRS commissioner from 2003 to 2007. “Now, it gets more complicated.”

“The most difficult part will be getting the money to the people who are entitled to it but whom the service doesn’t have current addresses or banking information,” he added.

Legislation that President Trump signed in late March created a program for one-time direct payments to most Americans, in an effort to help people cover their expenses amid the coronavirus pandemic. 

Individuals with income under $75,000 and married couples with income under $150,000 can receive the full amounts of $1,200 per adult and $500 per child. The payment amounts phase out above those income levels and are zero for individuals making more than $99,000 and married couples without children making more than $198,000.

The IRS has started to issue payments to taxpayers who provided the agency with their direct-deposit information on their 2018 or 2019 tax returns and is expected to start sending paper checks next week. Policymakers have been encouraging people to provide their bank account information to the IRS, because people are expected to get their rebates faster if they can get them through direct deposit than if they have to wait for a mailed paper check.

Millions of people have not previously provided their bank account information to the IRS, and reaching all of those people poses challenges.

The IRS’s in-house watchdog, National Taxpayer Advocate Erin Collins, wrote on her organization’s website Wednesday that in 2019, only 59 percent of taxpayers received refunds via direct deposit.

“While I expect the IRS will successfully deliver the Economic Impact Payments to most eligible taxpayers, many taxpayers will likely experience difficulties in obtaining their payments,” Collins wrote.

The IRS has made a series of announcements that aimed at helping people receive their payments and helping them get their payments faster.

The agency has launched two web tools in recent days. One, called Non-filers: Enter Payment Info Here, allows people who are not typically required to file tax returns to provide basic information to the IRS in order to receive their payments. The second, called Get My Payment, allows people who have not previously provided the IRS with direct-deposit information to do so and allows people to track the status of their payments.

But questions remain about how effective the IRS’s efforts will be and whether the agency will send the correct payment amount at the correct location to everyone who is eligible. There are also questions about whether everyone who is eligible for payments will be aware of what actions, if any, they need to take in order to receive their rebates.

The Get My Payment tool launched on Wednesday, and lawmakers reported hearing from constituents who were having problems using it.

As people were clamoring to use the tool, some experienced delays in accessing it. The IRS said in a statement Wednesday that when website volume is too high, people are briefly sent to an online “waiting room” but that their tool didn’t crash.

The IRS also said that people who are receiving a message that their payment status is not available may be seeing such a message if they’re not eligible for a payment, are required to file a tax return but haven’t done so, recently provided the IRS with their information via the non-filers tool or receive certain government benefits. The agency also said that as of Wednesday afternoon, 9.8 million people have received information about their payment through the tool, and 1.6 million people have provided the IRS with their direct-deposit information.

The IRS’s tools don’t perform every function taxpayers may want them to. For example, the Get My Payment tool does not allow people to change bank account information that is already on file with the IRS. A Frequently Asked Questions document from the agency said that if a person’s bank account has been closed since he or she filed a tax return, the bank will reject the deposit and the IRS will mail the taxpayer a check.

There have also been news reports of taxpayers expressing concerns about their payment amount, such as parents who said they got payments that did not reflect the fact that they have children or people who received payments for their deceased spouses. A Treasury spokeswoman said the department is aware of the issues and are looking into them.

Beyond hiccups with the IRS’s online applications and concerns about the potential for other glitches, tax-policy experts said that a key challenge will be for the IRS to get payments to all non-filers who are eligible. Non-filers typically have low income, and tax experts said that many of these people may not have reliable internet access that they can use to learn about the rebates and provide the IRS with any necessary information.

The IRS on Wednesday announced that recipients of Supplemental Security Income (SSI) — a program that provides benefits to elderly, blind and disabled people with little to no income — will automatically get $1,200 payments without having to file tax returns. The agency previously announced that recipients of Social Security and railroad retirement benefits will also automatically get payments. 

Lawmakers and tax professionals also want the IRS to automatically issue rebates to non-filers who receive benefits from the Department of Veterans Affairs. If non-filers aren’t able to receive the payments automatically, they will have to use the IRS’s non-filers web tool to get their rebate.

Janet Holtzblatt, a senior fellow at the Urban-Brookings Tax Policy Center, said that non-filers who aren’t in regular contact with federal or state agencies could be particularly challenging to reach and educate about the payments.

“They’re going to be a tough group to contact,” she said.

Groups that work with low-income and older Americans say they have been working to educate people and determine how best to reach out to them.

“We’re constantly trying to update and refresh the information we share, not just with our members but anyone who visits our website,” said Cristina Martin Firvida, vice president of government affairs at the AARP.