Regular guest blogger and sleuth Bob Kamman brings us a window into the administration of the 2008 Economic Stimulus Payments, newly relevant for the forthcoming 2020 Economic Impact Payments. Christine
In a recent comment here, I asked whether the Economic Impact Payments would be paid to deceased taxpayers and nonfilers. If the former National Taxpayer Advocate saw the question, it must have brought back memories of her testimony at a hearing on June 19, 2008, before the Subcommittee on Oversight of the House Committee on Ways and Means. The subject was the Economic Stimulus program that had been enacted several months earlier. It included rebate checks of $300 to $600 for millions of Americans.
She was questioned by Rep. Lloyd Doggett, Democrat of Texas. He still represents part of Austin, where at the University of Texas he earned his B.A. and J.D. degrees. He was, and is, a member of the Ways and Means Committee. He was not a member of the Oversight Subcommittee, chaired by Rep. John Lewis, but he was allowed to ask some questions because, obviously, something was on his mind.
He didn’t let on right away, what was bothering him:
Mr. DOGGETT. While I clearly am very concerned that all those who are entitled to this stimulus payment get it, I note, as Mr. Johnson pointed out, that we have spent $300 million to ensure that it gets done right.
I am also concerned about whether any of these payments are sent out to people that are not entitled to receive them. Are either of you involved on that end of it, to be sure that the stimulus payments only go to those who are entitled to receive them?
Ms. OLSON. Well, I think that the–actually, the way that the legislation has been written is pretty tight, as—-
Mr. DOGGETT. Well, let me tell you where it apparently wasn’t tight enough.
Ms. OLSON. Yes, Sir.
Mr. DOGGETT. Yesterday I received a notice dated June 16th that my mother would receive her payment next week. My mother died last September. Within a week of her death, because her payments are direct-deposited into her account, I notified Social Security, to be sure that we wouldn’t have any payment to which we were not entitled.
Do you have any estimates? I extend this question–I may not be able to stay for all their testimony–to the next panel, as well. Do you have any estimate of how many dead people are receiving stimulus payments?
Ms. OLSON. Sir, I don’t. There is a question on the website that I will go back and look at that talks about decedents, and who is entitled to that payment in the course of the decedent, because it would be–the payment is based on their 2007 filing. So she filed, or her–you know, her estate filed—-
Mr. DOGGETT. Her estate filed—-
Ms. OLSON [continuing]. A return for her. Perhaps under the law, she is entitled to it, and I would have to check—-
Mr. DOGGETT. Well, I would like to know about that, too.
Ms. OLSON. Yes.
Mr. DOGGETT. If, as a part of the stimulus–in her case, she does not have a surviving spouse–whether this payment goes to estates of people this year or not, and what efforts–it surprises me that there has not been any update, if there has not, of the database to reflect that. Do you know—-
Ms. OLSON. I will check on that.
Rep. Doggett then directed some questions to James R. White, from the Government Accountability Office:
Mr. DOGGETT. Do you know, Mr. White, if under this payments can be made to the estate if there is no surviving spouse of someone who died last year?
Mr. WHITE. I am not sure, off the top of my head. I–given the short period of time that IRS has had to implement the program, I don’t think yet there are good estimates of non-compliance problems. We are monitoring this as part of our filing season work for the Subcommittee on Oversight, and we will be reporting later this year.
Mr. DOGGETT. Well, it’s been right at 9 months since I notified Social Security of this. You would certainly expect that they would have updated the database to show the correct information.
Fortunately, they have not been sending, to my knowledge, any direct deposit of her Social Security check. You would expect that they would have it all–all the database–corrected in 9 months, wouldn’t you?
Mr. WHITE. We are–this is something we are monitoring, and we will pursue as part of our ongoing work for the Subcommittee.
Mr. DOGGETT. Thank you very much.
Chairman LEWIS. Thank you. Now Mr. Brady is recognized for his questions.
That would be Rep. Kevin Brady (R-Tex.) from Houston, who was a Committee member but not on the Subcommittee. Rep. Brady wanted to make a point about the price of gas.
“The question today deals with the technical aspects of delivery,” he said. “But I think the bigger question on the stimulus checks is, is it working. Are these checks stimulating our economy across this country, as was hoped? I think the answer is no, or certainly not as much as it could. There is reason for that. In the past year, rising fuel prices have, I believe, neutralized the impact of the stimulus checks. Just in the past year, the average family in America is now paying $536.50 more for fuel than they were a year ago. It is hard to have–with $300 to $600 stimulus checks, it’s clear that these checks are being drained down our gas tanks.”
After a brief soliloquy about dependence on foreign oil, he ended with, “Ms. Olson, I won’t ask you that question, the impact.”
Ms. OLSON. Thank you.
Mr. BRADY. I will say, though, you have raised a separate issue from that, which I feel we ought to be exploring. That’s the issue of debit cards. Seems to me we need a–as much as we can–more of a 21st century response to challenges, short-term challenges, like this.
Can you comment on how those would occur, and who would be eligible to get them?
Ms. OLSON. Well, I do think I have to say the IRS is exploring the idea of delivering regular refunds on debit cards as Social Security has started to use debit cards for those individuals who don’t have bank accounts. There are savings to the government in that regard, so that you don’t have to issue paper checks.
A debit card has an account number and a routing number, just the same way as a bank account does. I think my understanding is, with Social Security, that Treasury has entered into a contract with one entity to deliver these cards. It’s no fee to the individual receiving the card. It can be done in any number of ways: people going into banks and picking up a card, or being assigned a card themselves.
So, I think that, you know, the–that would just–for those individuals who are unbanked, or even in the area where we’re sending out paper checks, the delivery of dollars is so much faster if we’re delivering it electronically.
Mr. BRADY. Yes.
Ms. OLSON. The debit cards are just really, to me, as you said, a 21st century solution.
Mr. BRADY. Those debit cards, since people are struggling so much with high fuel prices, you know, if they weren’t able to afford something they needed, but instead had to buy higher gas, would they be eligible to use it at the gas pump?
Ms. OLSON. Absolutely. The Social Security cards are used anywhere that essentially a credit card is taken. So, at food stores, at gas tanks, at ATMs, et cetera.
Mr. BRADY. All right. Thank you, Chairman. Yield back
While Rep. Brady was lamenting the rising price of gas and the national dependence on imported energy, Nina Olson located some information about payments for deceased taxpayers. She asked,
Ms. OLSON. Mr. Chairman, may I answer Congressman Doggett’s question? I found—-
Chairman LEWIS. Yes, you may, Ms. Olson.
Ms. OLSON. Thank you. There is a FAQ on the IRS website that says, “If an individual dies, what happens to his or her direct deposit, or stimulus check?” The answer is, “Stimulus payments will be issued in the name of the individual eligible for a payment on a filed 2007 income tax return, or to the account designated by the individual on that return. Thisincludes situations where a person dies after filing a return, or where the final 2007 income tax return was filed by a personal representative or surviving spouse.”
“Any issues or concerns involving a decedent’s filed return, or the related stimulus payment, should be addressed by the legal representative of the decedent’s estate.” So—-
Chairman LEWIS. Now I turn to Mr. Pascrell for his questions.
So there you have it. In 2008 the law was written as a credit on 2008 returns, but with an advance payment before the end of the year, based on information from the 2007 return. The recipient did not have to survive until 2008. I found an archived version of the 2008 FAQ to which she referred. It was issued on March 17, 2008, only 32 days after the law was enacted.
The 2020 law follows the structure of the 2008 law, except that it allows a look back to 2018 if no 2019 return was filed. It remains to be seen, whether IRS will apply it to decedents as was done twelve years ago, and how long it will take to decide.