ineligible taxpayers should return their stimulus pymt

[schirallicpa]

what a nightmare the next few months will be. 

I have an older client who's wife died in early 2019 so I thought, based on filing a joint return, he was could keep the 2400 that he received.  This is telling me otherwise.  This makes me sad.  He will be so confused.

 

https://www.accountingtoday.com/news/irs-explains-how-ineligible-taxpayers-should-return-their-coronavirus-stimulus-payments?position=editorial_1&campaignname=ACT_Bi Weekly_Tax Practice-05072020&utm_source=newsletter&utm_medium=email&utm_campaign=ACT_Bi+Weekly_Tax+Practice%2B'-'%2B05072020&bt_ee=Xn6a3SJq%2FwXSwwk50MK1nARfi8jdHK%2BHDyDyKnTinSK3i2oiVuYctvySCzejLzpm&bt_ts=1588867293656

 

[Lion EA]

We don't have substantial authority yet. Tell your client to hold the payment/not spend it all and wait until you have further guidance for him.

[Lee B]

48 minutes ago, Lion EA said:

We don't have substantial authority yet. Tell your client to hold the payment/not spend it all and wait until you have further guidance for him.

What would you consider substantial authority, they're making it up as they go along !

[Lion EA]

Exactly, a Mnuchin quote and a couple of FAQs are not substantial authority and are likely to change, as we've seen all along. As you say, they're making it up as they go along. Wait. Our widow and widower clients need these payments. Don't rush to return them until we know more.

[Abby Normal]

From the law: "For purposes of this section, the term ‘eligible individual’ means any individual other than—

(1) any nonresident alien individual,

(2) any individual with respect to whom a de-
duction under section 151 is allowable to another
taxpayer for a taxable year beginning in the cal-
endar year in which the individual’s taxable year be-
gins, and

(3) an estate or trust.
 

That is it. Pretty wide open if you ask me.

[Abby Normal]

I would argue that holding onto payments until the 2020 tax forms come out, is prudent.

[Medlin Software, Dennis]

3 minutes ago, Abby Normal said:

I would argue that holding onto payments until the 2020 tax forms come out, is prudent.

Hear Hear.  If the amount is a credit on the 2020 return (as is what I believe to be the case), then those who were alive on any date in 2020 should be eligible (including some COVID babies!).  For those who passed before 2020, it seems reasonable there could be a claw back attempt, but at first, I remember reading articles which stated no claw backs.

Like PPP forgiveness, until we see the rules, it is only a guess, since I suppose the credit could be given a specific must have been breathing date range.

[Edsel]

Mr Schiralli - I believe most of us probably are aware of people who received stimulus $$ which were not entitled.  I am further told by good sources on this very forum that the 2020 line item can result in a credit only - and cannot result in a payback debit.  I believe these sources to be correct.

Absent any way to recover this $$$ on the tax return, the only way appears to be for the IRS to chase down improper payments on their own, and someone is going to have to fund administrative money to their collection department to get this done.  Additionally, it is hard to imagine most of these improper payments being any mistake other than the IRS.

Given the political climate involved with this stimulus, I don't see the above happening.  I'm telling my people if they get a check, just to simply enjoy it.  I could be wrong.

[Abby Normal]

 

 

[Randall]

 

[Lee B]

"But the act was written so quickly that no one bothered to ensure that money wouldn’t be sent to the dead, said Nina Olson, a former IRS official and current executive director of the Center for Taxpayer Rights.

Olson estimates that the IRS may have mailed thousands of checks, potentially worth tens of millions of dollars, to people who the agency should have known had breathed their last." . . . . . ."Olson, of Taxpayers Rights, concurred. “There’s no legal interpretation,” she said. “I don’t know how they’re basing their decision” to ask for the money back.

Every week, the IRS receives a master death file of every American who has died." . . . .  .

"Olson, then the National Taxpayer Advocate, for the IRS, testified before Congress about the mix-up. During questioning, U.S. Rep. Lloyd Doggett, D-Texas, pointed out that his late mother had been granted $300. The IRS then did not make an effort to have that money returned.

“Just like 12 years ago, (the law) could have said ‘don’t send it to people who are deceased,’” Olson said. ‘But they didn’t. Now they’re putting it on the taxpayers of the world to correct the mistake"

[Abby Normal]

51 minutes ago, cbslee said:

to correct the mistake

It's an assumption that it was a mistake. If the money is out there in circulation, then it's achieved the purpose of stimulating the economy.