IRS in Action: Fixing the Injured Spouse EIP Issue

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One of the most frequent problems I’ve seen this summer has been the IRS taking “joint” EIP payments and applying all of it to one of the spouses back-due child support where the other has no such obligation. This is the prototypical “injured spouse” scenario, and in these difficult economic times it has taken on an even greater importance.

On Tuesday, August 25 the IRS issued a news release stating that roughly 50,000 injured spouses would, at long last, be receiving the EIP that had been applied to child support. This issue has been covered numerous times on Procedurally Taxing here, here, and here, and has seen a tremendous response in the comments sections to each post. This post will give a brief recap of what the IRS news release says, and what comes next.

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The IRS previously gave indications that they were going to start working (in earnest) on resolving the problem. As Keith previously discussed, a National Taxpayer Advocate blog post suggested a late-August timeframe for the IRS fixing many of these issues. Late-August has essentially come and gone, and the IRS news-release now anticipates payments being sent “early-to-mid-September.”

Hopefully the IRS meets this timeline. But it is important to note that even if it does, this timeline only applies for some, and not all, injured spouses. For the purpose of issuing the EIP, it is best to think of three tiers of injured spouses: (1) those that the IRS already has an “injured spouse indicator” on file for, (2) those that have an injured spouse indicator in queue, and (3) those that never filed the injured spouse form at all. As we’ll see, tiers two and three may be virtually indistinguishable from a practical perspective, and only the first tier should receive the payment by early-to-mid-September. So, naturally, one wonders: how do you get in the first tier?

(Before I go any further, please note that the IRS doesn’t actually or explicitly have these “tiers” and is not taking any preferential actions for some taxpayers over others. I am just suggesting the concept as a helpful way to consider who can expect payments sooner than later.)

Tier One of Injured Spouse Relief – You’ve Told the IRS You’re an Injured Spouse, and They Heard You

The first tier is for those individuals where the return information the IRS used to issue the EIP already indicated that they were an injured spouse. I take this to mean that if you filed a 2019 return with a (likely electronic) injured spouse form the IRS knows about it and is making the fix. But since the EIP also (sometimes) pulls in 2018 information, exactly who falls into the first tier isn’t crystal clear.

The IRS news release says that if you filed a 2019 return with an injured spouse form you don’t need to take any action and should receive the payment. What if your 2019 return doesn’t have an injured spouse allocation, but 2018 does? The IRS teases that “in some cases” filing an injured spouse form with your 2018 return is enough… but what cases are those? Is it where the IRS relied on the 2018 return information for the EIP? That would be my educated guess, but it would be nice not to have to peer into the crystal ball on this issue.

Note also that the IRS is still seriously backlogged processing 2019 paper returns. The Great State of Minnesota’s congressional delegation has uniformly voiced its concern to the IRS on that matter (see letter here), but there is still work to be done. My bet is that if you filed your 2019 paper return with an injured spouse form you slip from tier one to tier two…

Tier Two of Injured Spouse Relief – You’ve Told the IRS You’re an Injured Spouse, but Your Voice is Echoing in the Distance

Tier two is anyone with an injured spouse form currently nestled among the (literally) millions of other documents the IRS needs to open and process. The IRS news release doesn’t actually make any reference to these standalone injured spouse relief forms. Instead the IRS breaks taxpayers into just two camps: those that submitted an injured spouse form with their return and those that didn’t file an injured spouse form at all. But I think that oversimplifies, because a lot of people may have submitted an injured spouse form either by paper with their yet-to-be-processed 2018/19 returns or as a “standalone” paper form after filing a return. I would not place those individuals in the first tier. They are in the “wait a bit longer” group.

There is no special processing center for a standalone injured spouse form: generally, it goes to the same place you would send your tax return. Because of this I have no idea how the IRS would be able to ferret these injured spouse forms from the other papers clogging their arteries to bump the individuals up to tier one. For present purposes, I’d say that filing an as-yet-unprocessed injured spouse form is the equivalent of not filing one at all in the dichotomy that the IRS provides.

The news release somewhat coyly mentions that the IRS doesn’t have a timeframe for responding to these, but will issue checks “at a later date.” One would hope those payments would go out before December 31, 2020, but I don’t actually think there is a statutory imperative for the IRS to apply these payments at any given time. Really just more of a publicity imperative. Fortunately, the IRS news release gives me reason to believe that the IRS is taking this seriously and moving forward with solutions. I believe this because of tier three…

Tier Three of Injured Spouse Relief – You Haven’t Told the IRS Anything, But They Still Hear You

Here is where things get interesting. The IRS says that if you haven’t filed an injured spouse form at all but had your money go to a spouse’s unpaid child support obligations you still don’t need to take any action. How is this possible? Here is where I think we can read between the lines of how the IRS is really dealing with this issue. The only way I can possibly make sense of this is if the IRS is automatically combing its records for ALL joint-taxpayers that had EIP sent to child support agencies and/or all accounts where only one spouse has a certified debt to a child support agency. If people can think of other ways the IRS might already know who is affected without an injured spouse form on file, I’m all ears.

In other words, forget everything I said about three tiers (apologies for wasting your time). The IRS seems to just be looking at its databases and pulling two bits of information from joint returns: (1) injured spouse indicator on file and (2) payments sent to child support with only one taxpayer certified liable. Arguably, dataset two is everything that would be needed, but it also seems that (for whatever reason) those that have the injured spouse indicator on file make for an easier fix. Thus, they fit into the early-to-mid-September payment group. I am not an expert on how the IRS recoups the payments already issued to child support agencies (and very much welcome comments from anyone that has familiarity with the process), but that could also factor into why the injured spouse indicator may matter.

It appears that the IRS is taking a systemic approach to this, while recognizing the unique limitations of the pandemic on just applying manpower to processing all the paper injured spouse forms that have piled up to them. Kudos to the IRS for their problem solving, if that is the case, and especially if they are able to pull this off without requiring those affected to take additional action or send additional mail.

The IRS news release was very short and fairly sparse on details. Many questions and issues remain with the EIP more broadly, but some lessons hopefully can be gleaned in the interim. An overarching lesson may be that the “one-and-done” goal of the IRS to issue a single payment and then sort things out in the 2021 filing season is not feasible (see Nina Olson’s post here). Even strictly on the issue of injured spouse payments, it isn’t immediately clear that an IRS fix won’t need tweaking for many individuals. For example, where the EIP involves an extra $500 for dependents, and especially in the absence of an injured spouse form “allocating” dependents among joint taxpayers, it is not immediately clear how the IRS will decide to split the $500 that was offset to child support. My assumption is that the IRS will read IRC § 6428(e)(2) to mean that you just split the entire EIP down the middle for joint returns, which I think is a completely defensible (though not necessarily required) reading of the statute. 

In any event, one hopes that the IRS implement the fix with a heavy dose of urgency: as the comments sections on Procedurally Taxing amply attest, there are a lot of people hurting for these checks.

About Caleb Smith

Caleb Smith is Visiting Associate Clinical Professor and the Director of the Ronald M. Mankoff Tax Clinic at the University of Minnesota Law School. Caleb has worked at Low-Income Taxpayer Clinics on both coasts and the Midwest, most recently completing a fellowship at Harvard Law School's Federal Tax Clinic. Prior to law school Caleb was the Tax Program Manager at Minnesota's largest Volunteer Income Tax Assistance organization, where he continues to remain engaged as an instructor and volunteer today.

Comments

  1. Norman Diamond says

    “There is no special processing center for a standalone injured spouse form”

    Yes there is, Covington Kentucky.

    If the IRS tells the injured spouse to send the form to a different address and the person obeys, then the IRS tells Tax Court that the person sent the form to the wrong address and the court dismisses for lack of jurisdiction. Covington Kentucky is the place.

  2. Bob Kamman says

    To answer your question about how the IRS gets the money back from the state agency: The system apparently anticipates cases in which an injured spouse may qualify for a refund. This is from the website of the Office of Child Support Enforcement:

    The state that submitted the case typically receives money from a tax refund offset within two to three weeks. If the tax refund offset is from a jointly filed tax return, the state may hold the money for up to six months before disbursing.

    https://www.acf.hhs.gov/css/faq/how-does-the-federal-tax-refund-offset-program-work

    • Caleb Smith says

      Thanks Bob! Very helpful. I was unaware of the 6 month potential holding period.

      Also, for clarification on a previous comment, I believe that Mr. Diamond is mistaken. The Covington KY address is for standalone “INNOCENT” (not INJURED) spouse claims. A common mistake to get the two mixed up. I’m not sure what Covington KY would do with an injured spouse claim, and frankly I wouldn’t want to test that question.

      • Norman Diamond says

        I apologize for my mistake. Though I think Congress and the IRS also need to apologize since it really is difficult to figure out whether a spouse’s situation is innocent or injured.

    • Brian Sumling says

      I didn’t even receive a stimulus check. I owe a past Arrearage. My son was born in 1988. Wondering why I haven’t received one, and also why I never received a letter or anything.

  3. This is all ridiculous & all I keep hearing about is the injured spouse. What about the people, like myself, that are owed back child support & hasn’t received a penny in over a year??? And they are going to hold it for 6 months. That is not fair!!! Send me my portion of my ex-husbands stimulus $1200 & send the spouse hers. It’s simple. And actually, my ex & his spouse want both of their payments to be applied to his back child support. There is NO REASON to be holding what I am due from my ex. This needs to be fixed ASAP! Having expenses for a child is costly, especially for a single parent household & their income is only $25,000 per year & that amount is just enough above the amount required to qualify us for SNAP & Medicaid. We are poor & struggling, but my ex & his spouse are not. Explain this to me please!!! It’s not a million dollars, it’s $1200!

    • Allow me to be foolish enough to rush in here and agree with you. The injury I see is to the custodial parent who is not collecting on a court order. Did someone force the second spouse to enter a marriage that came with unpaid obligations from the first? If not, where is the injury? I propose a competition for renaming this condition. How about pathetic spouse? Salutatorian spouse (placed second when sympathy is awarded)? When all is said and done, though, I suppose we should assume that all three parties involved are doing the best they can. Unfortunately, some children are injured along the way.

      The solution is to require the spouses to file separate returns. We do that to couples with a spouse who does low-income public-benefit work and wants to qualify for student loan forgiveness. The privilege of filing a joint return would be a strong incentive to bring support payments current.

      • Also, I am owed 17k for a case that I will never see so I’m on both sides here. I’m also responsible and hardworking. Please don’t refer to spouse on either side as pathetic unless you know their full story!!!!!

      • Michelle Decker says

        Im floored at the ignorant statements being made here! My husband got behind in child support years after we got married when he became disabled. I have been the sole bread winner in the family. I did not want to be poor so I went to college and got a nursing degree so we could live comfortably, not rich just comfortably. We have 3 children together who are minors and the children he owes back support on are grown with families and lives of their own now. I always file an injured spouse form because I need our tax return money to continue to support our family ALONE since my husband is disabled and receives NO disability or any other income. Financially I am a single parent, only I have 4 dependents and one has child support arrears owed. I should pay that? I absolutely don’t feel that I should, many many debts we did create together however, that one we did not. Also, the money does not go to the children at this point but my money does go to our children. All of our stimulus money was taken and distributed to his ex, every dime of it!! The money we were given to help me financially get through these tough times was taken from me and given to someone else that is now single with no dependents. Im very upset over this. I have a grown daughter and her father owes me over fifty (50) thousand dollars and I did not get a dime of his stimulus yet mine, my husbands and our 3 childrens’ money was all taken. To top it off I have busted my ass through this entire pandemic. As a RN I have overworked myself to care for the sick people in my community and I have not even been given a break during this. Now to top it all off they keep all our stimulus money, distribute it to another woman and basically tell me to suffer. Then people make ignorant comments like you have just made and its very frustrating. Please consider all situations before you judge….not that anyone should be judging anyone but…think, not all situations are equal.

        • I agree, I was married and always filed the injured spouse form to be able to support myself and my children, however now that I am remarried the state of PA has taken my ex husband and his wife’s stimulus money and I was just notified that they will be holding it until March 2021. Pending they do not have to give it back to them because she can still complete the injured spouse form. I somehow do not find that fair as I sit here with my children.

          • Rodney Smith says

            Why March 2021. I am currently waiting on an intercepted check with injured spouse. They said they will not fight it. As of today 6 months have passed and Texas oag said it’s on hold for now.

          • I also am waiting on that 1200 that shows credited to his account for arrears but has not been available to me to use and it’s been 7 months now and can’t get a release date always told still on hold…

        • I am SO SORRY for the very difficult position that you are in, it definitely is NOT fair and I agree that no one should be judging or speaking on anyone else’s situation besides their own. I really hope that you have or WILL receive back the stimulus $ that you rightfully deserve. Especially when you’re one of the frontline workers who are at risk EVERYDAY that you have to work w/ this horrible Pandemic!♡

  4. Bob Wunderle says

    How will this work in community property states such as Idaho, where the IRS position is that is has the right to claim 100% of the refund from both spouses to pay back taxes owed by only one of the spouses? Also, if the credit is applied to children under age 17, how does the IRS know which of the two spouses would claim the children had they filed MFS?

  5. I’m not sure as to whether this will matter to anyone else or not however, I am going to speak freely. Yes, I owed back Child Support payments for anyone who wants to know why I am so upset. Although for the past 3 years I’ve been awaiting my decision on Social Security (SSI) and I have been approved for it since February 2020!! Here is the main point though..for the past 3.5 years almost 4 now I’ve been refused any visits, or weekends with 3 out of 4 of my children BY MY EX HUSBAND [note that I have parental rights and there isn’t a active court order] nevertheless My New husband of 4 years has no obligation to the children, also he has been receiving SSDI since 2015. I think it’s totally heartless for my family to go through this and have BOTH MINE AND HIS STIMULUS CHECK OFFSET BY DIVISION OF CHILD SUPPORT especially when I was told I wouldn’t be hassled for a payment due to my income. How is this fair?

  6. I e-filed 2019 taxes, claiming injured spouse, on April 7. I have claimed injured spouse since 2012. Even though I e-file, I akways receive a paper refund check. It typically takes 3-4 months for my portion to be returned.

    I recieved notice of both stimulus halves being recieved by child support, and a couple weeks later she received her half towards back child support. (Can I just say she called to make sure we were good and asked if we needed that money back. I truly love my family) Anyway… We haven’t stopped working throughout the pandemic so were doing good. But it is seriously taking forever and all I want to do with that money is pay our state taxes we owe! I still haven’t received my regular tax refund either. I wish I could get a second job working for the IRS and help them out! They clearly need more workers and updated systems to process everything.

    • Update: My check came today! Funny seeing as how I just looked this up yesterday trying to figure out what the hold up was.

      Hopefully my refund isn’t too far behind!

  7. Yeah I can’t believe it cause me and my son are in no way responsible for that stimulus money went towards my husband child support. I am on SSDI AND WE DID AN INJURED SPOUSE PLUS MONEY FROM TAXES WHICH AGAIN I HAVE NO OBLIGATION TO PAY FOR IT OR SHOULD MY 15 YEAR OLD SON ESPECIALLY WHEN THE COVID-19 HAPPENED WE COULD OF USED THAT MONEY. YES PLACES ARE HIRING BUT MY HUSBAND HAS WORKED IN FOOD SERVICE ALL HIS LIFE AND NIW THEY ARE DRUG TESTING, BACKGROUND CHECKS AND ALSO CREDIT CHECKS SO LET ME SAY THIS HOW ARE PEOPLE THAT ARE STRUGGLING CANT GET HIRED CAUSE OF SOMETHING THEY DID MORE THAN TEN YEARS AGO NOT GET THAT JOB. ITS NEVER BEEN LIKE THIS AND ITS NOT FAIR I AM IN DENVER COLORADO AND TRYING TO SURVIVE NOW WHEN ME AND MY HUSBAND HAVE NO CHOICE BUT TO DO THAT AND PEOPLE DON’T UNDERSTAND THAT WHY ARE THEY MAKING IT HARDER PLUS THE PEOPLE WHO NEED HELP THERE MAKING IT HARDER ON FAMILIES. THEN YOU HOLD A SIGN SAYING ANYTHING HELPS AND PEOPLE LIKE TODAY PUT YOUR WIFE ON COLFAX AND SELL HER BODY AND TELLING ME THAT HE WILL PAY ME TO SUCK HIS PRIVATE AREA IN FRONT OF MY HUSBAND AND YES SOME PEOPLE ARE STRUGGLING BUT THE ONES WHO AREN’T ARE SAYING STUFF LIKE THAT SAYING STUFF HURTS PEOPLE CAUSE SOME HAVE NO CHOICE BUT THIS WHOLE STIMULUS MONEY TAKING IT FROM ME AND MY KIDS ALSO LIKE I SAID I AM ON SSDI WHICH IS MAKING IT HARDER. PLEASE FIX THIS ITS NOT RIGHT AT ALL WHICH IS THEFT AND COLD-HEARTED PEOPLE KEEP DOING IT PEOPLE WE NEED TO STAND UP FOR WHATS RIGHT AND PEOPLE WONDER WHY THEY ARE SO BEHIND CAUSE OF THIS RIGHT HERE. PEOPLE WE NEED TO TAKE A STAND MAYBE IF COVID19 WASN’T HAPPENING I UNDERSTAND CAUSE WE WOULDN’T BE GETTING STIMULUS MONEY BUT TAKING IT FROM A DISABLED PERSON AND YOUNG KIDS TO PAY FOR OTHERS CHILD SUPPORT IS JUST WRONG. THIS WORLD NEEDS FIXING BUT EVERYONE NEEDS TO STAND UP FOR WHATS GOING ON AND WHATS RIGHT. GOD BLESS EVERYONE.

  8. Hey. I filed my taxes for 2019 with my wife. She owes bak child support and they took my stimulus and only sent me a EIP payment for $600 dollar’s. I filed injured spouse on this year’s taxes bc she worked in home with elderly woman 24/7. She received cash every month and no taxes were taken out but I’m the one being punished for this mistake. 😡😡

  9. I filed injured spouse when I filed 2019 taxes. Payments were supposed to be issued in September. I received nothing. Now in November and many others have received theirs. I am so over this. Where is my money?? And IRS and tax payer advocates can not answer any questions because the “IRS has not given an update”. Ugh!

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