Updated 9:50 p.m. with announcement of new Treasury policy
Washington – The Treasury Department late Wednesday reversed itself after pressure from lawmakers, ruling that Social Security beneficiaries who aren’t required to file income tax returns will not have to file in order to receive a $1,200 stimulus check. The move was a response Connecticut lawmakers and others who pushed back on an earlier Internal Revenue Service ruling.
“We want to ensure that our senior citizens, individuals with disabilities, and low-income Americans receive Economic Impact Payments quickly and without undue burden,” sadi Treasury Secretary Steven Mnuchin. “Social Security recipients who are not typically required to file a tax return need to take no action and will receive their payment directly to their bank account.”
That’s a reversal from guidance released Monday, by the Internal Revenue Service that said all Social Security recipients must file a tax return to receive their $1,200 economic stimulus payment.
Many low-income seniors aren’t required to file a federal tax return and this IRS mandate would have prevent millions from easy access to relief.
The Treasury Department will get most of the information it needs to distribute stimulus money from taxpayers’ 2019 tax return, or their 2018 returns if the return for last year hasn’t been filed yet.
But the CARES Act, a $2.2 trillion stimulus bill signed into law last week, says the IRS should get its information from Social Security to send seniors who don’t file tax returns their stimulus checks.
Late Wednesday, the Treasury Department, under pressure from elderly Americans and lawmakers from both parties, said it would comply with the intent of the law.
Sens. Richard Blumenthal, D-Conn. and Chris Murphy, D-Conn., were among a group of 41 senators who on Wednesday expressing alarm that seniors who were not required to file a tax form would have to do so to receive stimulus money.
In a letter, the senators called for the Treasury Department and Social Security Administration to ensure that all Social Security beneficiaries will automatically receive the direct assistance included in the CARES Act without having to file tax returns.
“This [IRS] filing requirement would place a significant burden on retired seniors and individuals who experience disabilities, especially given the current unavailability of tax filing assistance from Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs during the COVID-19 crisis,” the senators wrote. “We strongly urge you to ensure that economic stimulus payments are automatically sent to vulnerable seniors and individuals who experience disabilities, without these individuals needing to file a tax return.”
On Tuesday, Rep. John Larson, D-1st District, a member of the Ways and Means Committee that has jurisdiction over the IRS, also took issue with the IRS guidance.
“Yesterday’s announcement from the IRS goes against the point of the economic impact payments, which is to get money, especially to the most vulnerable, quickly,” Larson said. “This requirement will hinder seniors and people with disabilities who receive Social Security benefits from accessing these payments.”
The uproar was bipartisan.
“Despite language Congress passed in #COVIDー19 relief bill to ensure Social Security beneficiaries would NOT have to file taxes to receive direct relief, IRS issued guidance saying seniors DO have to file taxes. That’s ridiculous. IRS should follow the law that Congress passed,” Sen. Josh Hawley, R-Mo., tweeted on Wednesday.
Treasury Secretary Steve Mnuchin said taxpayers who have provided the IRS with direct deposit information, estimated to be about 60 percent of filers, should begin receiving their stimulus money by April 17. For others, who will have their checks mailed to them, it could take week, or even months longer.
The IRS said there would soon be a web-based portal for people to update their direct-deposit information.
The stimulus bill provides individuals who earn up to $75,000 a year in adjusted gross income a $1,200 check and couples who earn up to $150,000 a $2,400 check. Heads of households can earn up to $112,500 to receive a rebate check of $1,200. An additional $500 will be added for every child in a household under 17.
Individuals who earn more than $75,000 but less than $99,000 will receive reduced payments, as would couples who earn between $150,000 and $198,000 a year and head of household filers who earn between $112,500 and $146,500. Their rebate checks will be reduced by $5 for each $100 that a taxpayer’s income exceeds the phase-out threshold.
Individuals who earn more than $99,000, couples who earn more than $198,000 and head of household filers who earn more than $146,500 will not receive a rebate.