The CARES Act enacted in March authorized payments ( up to $1200 per taxpayer plus $500 per qualified dependent child ) to be paid to taxpayers as Economic Impact Payments (EIP). Since the primary distribution method has been through the IRS tax return sytem, based upon 2019 returns (if filed) or 2018 returns (if 2019 not filed), payments have been received for deceased taxpayers who have died since the return was filed. In a nutshell, those payments to deceased taxpayers cannot be kept, and must be returned to the IRS.
The IRS has now released its guidance on how to accomplish the return of such a payment; the guidance is through Q&A statements issued by the IRS on May 6, 2020, as follows:
A10. No. A Payment made to someone who died before receipt of the Payment should be returned to the IRS by following the instructions 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 on account of the decedent. This amount will be $1,200 unless adjusted gross income exceeded $150,000.
A41. You should return the payment as described below.
If the payment was a paper check:
- Write "Void" in the endorsement section on the back of the check.
- Mail the voided Treasury check immediately to the appropriate IRS location listed below.
- Don't staple, bend, or paper clip the check.
- Include a note 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:
- Submit a personal check, money order, etc., immediately to the appropriate IRS location listed below.
- 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.
- Include a brief explanation of the reason for returning the EIP.
The return or refund must be submitted to the proper office listed in the guidance; for Missouri taxpayers, the address is:
Kansas City Refund Inquiry Unit
333 W Pershing Rd
Mail Stop 6800, N-2
Kansas City, MO 64108.
In summary, the practical intent to push the EIP payments out as quickly as possible has created this particular dilemma; now we know these are not “free lunch” receipts and, similarly to a bank error where your bank account balance accidentally has a few extra zeroes in it, you cannot retain the erroneous payment.
Please contact our business attorneys if you need assistance with a refund or have other business or personal issues related to the COVID-19 events.