Stimulus payments for the most financially vulnerable

Nina Olson wrote in prior post about the fact that the current IRS guidance requires recipients of SSI and VA disability payments who otherwise have no requirement to file tax returns to file some information with the IRS to allow it to know about them and where to send a payment.  The IRS has now created a portal for individuals who otherwise do not need to file a return to go online and fill in a relatively simple form. 

Those of us practicing in low income tax clinics have been fielding many questions from organizations that typically sent clients to our clinics.  They have clients who do not otherwise need to file returns but who need assistance filling out even the simplified return.  There remains hope that the IRS might do for SSI and VA recipients what it has done for regular Social Security recipients so that these individuals would not need to file anything in order to receive the stimulus payments.  Their names and payment information already exist in the records of other federal agencies who could make that information available to the IRS in the same way the IRS is going to receive the information regarding regular social security payments.


With the publication of the portal last week these individuals can choose to go to the portal and fill in the requested information, if they are able to do so, or to continue waiting hoping that the IRS will make an announcement making it clear that it will pull the information from other federal agencies or that it will not.

In an email exchange with Bob Kamman last week, he reminded me of the significant prison population in the United States – approximately two million people.  These individuals appear to qualify for the CARES rebate.  Many in this population will not have filed returns in 2018 or 2019.  They may also have difficulty accessing the portal or interfacing with it.  Many in this population will be unbanked.

There will be many reasons that low income individuals will have difficulty obtaining the CARES rebate.  To the extent possible the IRS should try to make the process as easy as possible.  The creation of the portal is a good step.  Now we have to find ways to assist the most vulnerable to succeed in using the portal or other processes to obtain access to the rebate. 

Below is an article written by Annie Harper who is a cultural anthropologist at the Yale School of Medicine Department of Psychiatry, where she studies the financial difficulties faced by people with mental health problems.  We are including her article in this post with her permission.  She highlights the difficulties facing some in obtaining the CARES rebate.  Keith

‘I haven’t filed taxes for years’, Sharon said, ‘I wouldn’t even know where to start!’. An energetic woman in her early 40s, active in the food insecurity advocacy community in our town, Sharon called me earlier this week to find out if and how she can access the stimulus payment that she has heard about on the news. I had explained to her that payments will be going to people who have filed taxes or are receiving Social Security income such as Social Security Disability Income (SSDI) – but she explained that she does not fall into either category. She has struggled with mental illness for most of her life, and her only regular income is from Supplemental Security Income (SSI), a payment for people who are disabled but have not worked long enough in life to qualify for SSDI (SSI also supplements benefits for retired or blind people who have little or no income).

Sharon receives food stamps so her basic food needs are met, but she struggles to pay her rent. She applied for a section-8 housing subsidy some time ago, after her mother moved into elderly housing and Sharon was no longer able to live with her, but the waiting list is long. Sharon pays $600 a month to live in a room in shared apartment; after paying rent and her share of utilities, there is less than $150 left to pay for basics such as toiletries, cleaning supplies, bus pass and clothing, let alone anything extra. She has been supplementing her income with stipends from research participation – research studies are fairly easy to come by in this university town – but the studies are drying up now that due to COVID-19 no in-person research is allowed. Her brother used to help her out, but he has lost his job and can’t even meet his own family’s needs.

There have been times over the years when Sharon made more than usual from a research study or was given money as a gift that she could have put aside as savings, but strict SSI asset limits – which discontinue benefits if a person has more than $2,000 in assets – discouraged her. She was also afraid of losing Medicaid, which has even more stringent asset limits here in Connecticut. Sharon now has no extra money at all coming in, and no savings to draw on, and she is anxious to get the stimulus check to tide her over and to hopefully put something aside for the months ahead.

Initial indications were that people like Sharon, receiving SSI, would automatically receive a stimulus payment, but recently it transpired that SSI recipients would have to file taxes to be able to qualify. When I explained this to Sharon, she was utterly confused. She worked sporadically earlier in her life, but only earned enough to file taxes once or twice and cannot recall how to do it. Normally, I would advise Sharon that she go to a VITA site, where she can get free help with filing her taxes, but the sites are all closed. Luckily, they are operating virtually, but Sharon is worried about whether she’ll be able to understand what she needs to do without someone to guide her through it, in person. She also has limited minutes on her free Lifeline cellphone.

Millions of Americans every year, like Sharon, do not file taxes. Some do not file because they have no income at all or, like Sharon, they receive SSI and are not required to file. People who work but don’t earn much can qualify for the Earned Income Tax Credit (EITC) if they file taxes, but some still don’t bother to file because they earn so little that they don’t think it’s worth it (the less you earn, the less you get in EITC). There are also many people who don’t know that they may be eligible for the EITC. Some may have heard of the EITC but don’t know that they can qualify even if they are paid in cash and haven’t received a tax form from whoever paid them. Others don’t file because it can be incredibly confusing to work out how to do it, especially for those with occasional cash or other non-salary income. Some people don’t file because they know that even if they are eligible for the EITC, they owe student loan debt, or back taxes, or child support, and they won’t get the credit – it will be taken to go towards those debts.

Even if she does manage to file, and can get the payment, Sharon doesn’t have a bank account, like millions of other Americans. It doesn’t seem worth it, given that she rarely has money to keep in an account, and she’s afraid of fees, particularly overdraft fees, which are disproportionately paid by low income people like her. She also worried that if the Social Security Administration saw her sporadic research stipend payments, they’d cut her SSI payments. So, her only option will be to get the stimulus payment by paper check. Not only will that take longer, but Sharon will have to go out and find a place to cash the check – at a time when she’s reluctant to go anywhere at all beyond the grocery store when necessary – and pay the corresponding fee.

It is tragic and absurd that some of the most financially vulnerable among us, who may be most in need of the stimulus check, will have to go through the most hoops to get it. I’m sitting here at home, with my and my husband’s salaries still being paid, and I don’t have to do anything because the IRS has my direct deposit information from last time I filed. The money will just drop into my bank account at some point, and I’ll have some thousands of dollars more, that I really don’t need. Meanwhile, the millions of Americans who receive SSI, or earn little or no income, so are likely more in need of money than most, are scrambling to work out what they need to do to make sure they get the payment. While handing out money sounds like a useful policy response, it is ultimately an inefficient and unfair way to manage the disastrous consequences of this public health crisis on households’ well-being.