Can Someone Keep Federal Money From a Deceased Person?

President Donald Trump, Treasury Secretary Steven Mnuchin – and now the Internal Revenue Service – asked people who received pandemic aid payments to deceased taxpayers to return them to the government.

However, certain jurists claim that there is no law that compels people to do so.

Some of the more than 130 million payments made to taxpayers to cope with the economic impact of the coronavirus under the $ 2.2 trillion financial assistance plan were sent to people who had died. This was mainly due to a delay in information on those deaths. This has happened before with assistance payments, and tax experts say it is almost inevitable.


However, it is the first time that the IRS – acronym for the tax collection service – asks relatives of deceased taxpayers to return the money. Some jurists claim that the government may lack the legal authority to demand the return. They also hint that the move could simply be an IRS reaction to pressure from the White House and the Treasury Department.

Trump and Mnuchin have publicly said in recent weeks that money sent to deceased taxpayers must be returned. However, the IRS had not issued any formal guidance to that effect this week. On Wednesday he updated his website and stated that if a person died before the payment was issued, the money should be returned. It also indicates how to do it.

The IRS and Treasury do not say what will happen if the payments are not returned or otherwise refunded.

Taxpayers’ exactivist Nina Olson said there is nothing in the law that prohibits sending payments to the dead, or anything that forces people to return checks. Olson stresses that the IRS did not mention on its website that the law requires payment to be returned.

“We started with those two statements, and thereafter,” said Olson, who now heads the Center for Taxpayers’ Rights, a nonprofit organization.

The Treasury did not respond to multiple requests for comment.

Taxpayer assistance payments have been made based on the information presented in their 2019 or 2018 tax returns. But they are considered a refund of 2020 taxes. The government used the previous tax forms to help expedite payments to the public by In order to somewhat offset the economic devastation caused by the coronavirus pandemic.

The problem is that some of the people who filed their taxes may no longer be alive. Those payments are sent to an heir or executor. If the payment was based on the last tax return after death, the check to face the economic impact could even indicate next to the name that the person is deceased.

It is confusing at best. But it would also be legal and logistical chaos for the government to try to get all the money back, and it is unlikely to do so, Olson and others said.

“They have no legal basis on which to rely,” he added.

The coronavirus rescue plan, which includes assistance payments, was approved in late March. The government began delivering them in April. There is no official figure on how many were sent to deceased people.

Bryan Camp, professor of law at Texas Tech University, is more cautious. He said that the legality of the payment could depend more on the date of the person’s death. If someone died in 2020, family members could keep the money, but if they died earlier, possibly not.

However, the IRS guidelines are more vague: only that death must be prior to payments, some of which are still pending.

Olson and others, including Keith Fogg, a Harvard clinical law professor, do not expect the government to resort to extreme measures to recover the money. According to the way the law is written, you would be in a difficult position to show that survivors are not entitled to payments in the first place.

“If someone dies in March of COVID-19, are they really going to tell (that person’s survivors) that they have to pay it back?” Olson asked. “No. I will accept the demand.”

So what should people who have received a check made out to a deceased do?

Camp says that if it’s not directed at you, return it. Olson says to keep it, the IRS has changed its mind about some rules before and could do it again.

“If you feel bad, give it back. If you don’t feel bad, I wouldn’t tell you that you have to return it, ”Fogg said. “The law is not being violated in my opinion.”

Democrat Richard Neal, president of the Resources and Excise Commission of the House of Representatives, agreed that there is nothing in the law that requires the return of money.

Although families who do not need the funds should return them, “some families who received the payments may be able to take advantage of the assistance to cover the costs associated with losing a loved one to the coronavirus,” Neal said in a statement. “People with that kind of need should be able to use the money during their crisis.”



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