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Scheduled Relief for Injured Spouses Whose Stimulus Payments Were Sent Elsewhere for Past Due Child Support

Posted on Aug. 13, 2020

When the IRS hastily set up the program for making the stimulus payments authorized by the CARES Act, it did not carefully program its computers to distinguish the cases in which one spouse on a joint return claimed injured spouse status. If you are not familiar with injured spouse status, find an explanation here.

Given the haste with which the IRS worked to accomplish the task it was given, this oversight is understandable, but it has created a lot of pain among those whose stimulus payments were diverted to pay past due child support of their current spouse.  As a reminder past due child support was the only liability for which the stimulus payments were offset.  We have written about this issue previously here, here and here.  We have received more comments on this issue than any issue on which we have blogged.

In a blog post on Monday, August 10, the National Taxpayer Advocate provides a chart of problems with the stimulus payments that the IRS is fixing or is not fixing.  The problem of wrongly diverting the stimulus payments of injured spouses is one that the IRS is working to fix.  The chart provided by the NTA indicates that the IRS anticipates fixing this problem by the end of August and getting the wrongly diverted checks to these individuals by that time.  It also indicates that individuals who have not received their checks by that point can come into TAS for assistance.

There is still a distinction between individuals who filed the injured spouse form with their return and those who did not.  Many individuals who know that their spouse has an outstanding liability such as child support or a student loan that will cause the offset of their refund year after year, routinely file the injured spouse form with the return so that the refund due to the non-liable spouse will flow through unimpeded by the offset provisions.  In normal circumstances the filing of the injured spouse form with the return keeps the offset from occurring.  Here it did not and that’s what the IRS is working to fix.  For individuals who did not file the injured spouse form with the return perhaps because this is the first year of the joint return, they do not claim a refund or for some other reason, it will be necessary for those individuals to file the injured spouse form in order to obtain the release of their stimulus payment.

TAS has not been accepting cases involving many of the problems created by stimulus payments because it viewed that it had no ability to assist taxpayers with many of those problems. On an individual case level, there was little or nothing it could do to fix their problems if the IRS had not developed a fix. On a systemic basis, it could have filed a broader taxpayer directive. Whether such an act would have sped up the fixing of the problems is unknown. The chart shows the cases on which the IRS is creating fixes, the time frames and the cases TAS will now accept. As mentioned above, it also shows the cases that the IRS is not fixing and that TAS will not accept.  Some of those cases are the subject of litigation that we are covering with other post. Some of those cases are not mentioned in the chart such as the cases of deceased individuals and prisoners.

The chart is helpful both in providing timeframes and in setting a marker for the fixes the IRS is not undertaking. It’s wonderful that the NTA is giving out this information and providing it in an easy to digest format. The IRS might consider doing the same in a prominent place on its website since not everyone receives the NTA blog posts.

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