Economic Impact Payments are on the Way: What You Need to Know
Last week, the IRS began sending a second round of Economic Impact Payments via direct deposit, paper checks, and EIP debit cards. The payment amounts are $600 per adult and $600 for eligible dependents. The IRS has issued 113 million payments by direct deposit and 34 million payments by paper check or debit card. Americans should see direct deposit payments in their accounts in the coming days if they haven’t already. Paper checks and debit cards should be delivered over the course of the next couple weeks.
Due to an IRS error, however, millions of direct deposit payments were sent to temporary or closed bank accounts used by third-party tax preparation companies to process tax refunds for certain taxpayers. The IRS initially indicated that people in this situation would have to wait to file their taxes to get their payments. But now a solution is being implemented to get payments to the majority of impacted Americans much quicker. Taxpayers do not need to take any additional action at this time and should continue to monitor their accounts for deposits. More details from the IRS can be found here.
Payments Sent to Wrong Accounts
The IRS erroneously sent payments for millions of Americans to inactive or closed accounts. Initially people in this situation who checked the Get My Payment tool either saw a deposit into a temporary or unfamiliar bank account or received a “Payment Status Not Available” message. The IRS initially told people in this situation that they would have to wait and claim the payment on their tax returns this year, but now the IRS has developed a solution that will help most impacted Americans receive deposits into their accounts much quicker.
The IRS, working with stakeholders, is still working to deliver a comprehensive solution for all impacted taxpayers. So far, they have developed a solution that will permit financial institutions to accept the deposits into temporary accounts and pass them on to the taxpayers. This solution offered by the IRS was not previously permitted in most cases and won’t solve the issue for some institutions. This process is currently underway, and some impacted Americans have likely already received deposits into their accounts. Most impacted Americans should see deposits into their accounts in the next week or so.
While we hope that the solution works for the vast majority of Americans, we expect that a significant number of individuals could be left waiting. We encourage continued collaboration on a solution for those Americans who may still be impacted. If you have not received a direct deposit payment by January 15, 2021 or a paper check or debit card by the end of January, you can reach out to your Member of Congress for assistance in trying to resolve the issue. And if you have not received a payment by the time you file your taxes, you will still have the opportunity to claim the EIP on your returns.
Ways and Means Republicans have been working hard with the IRS and stakeholders to understand and develop a solution to this problem to help ensure that every eligible American received an EIP as quickly as possible and Committee Republicans will continue to do so.
For more information about the basics of the payments, you can find a Ways and Means Republicans FAQ here and can visit the IRS EIP information center here.