IRS Erects Hurdle for Seniors & Disabled Awaiting Stimulus Payments
If only the Trump administration’s latest action on federal stimulus payments was a bad April Fool’s joke. Unfortunately, according to just-released IRS Guidelines, seniors and disabled Americans on Social Security must now file tax returns in order to receive cash relief payments.
“[The Trump] administration is creating barriers to Social Security beneficiaries, disabled people who have Supplemental Security Income, and veterans with pensions trying to get their $1,200 payments under the CARES Act.” – Daily Kos, 4/1/20
The IRS statement expressly contradicts the newly-enacted CARES Act stimulus relief bill. That legislation specifically provided that Social Security beneficiaries need not file federal income tax returns; the Treasury Department simply would use the 1099 statements that every beneficiary receives in order to issue stimulus checks.
Response from the advocacy community and Capitol Hill has been swift:
“My colleagues and I strongly urge Treasury Secretary Mnuchin and Social Security Administrator Saul to find a solution that will allow vulnerable groups to receive these funds automatically, without needing to file an additional return.” – Rep. Richard E. Neal (D-MA), House Ways & Means committee chairman
“The Secretary of the Treasury and IRS Commissioner should make a clear public statement that seniors and people with disabilities who receive Social Security won’t have to file a tax return to receive their stimulus rebate.” – Center for Budget and Policy Priorities
A group of more than three dozen Democratic U.S. Senators have sent a letter to the administration demanding that the I.R.S. clear up the confusion over its policy — and rescind any requirement that Social Security recipients file tax returns.
This afternoon, NBC News senior business reporter Ben Popkin reported that the IRS still plans to get Social Security beneficiaries’ data from their 1099 forms, but that “some seniors” still may need to file tax returns in order to get stimulus payments. Clearly, this kind of statement from the I.R.S. does little to clear up the confusion it has caused.
According to reporting by the Washington Post, it appears that the administration (and some in Congress) originally wanted to compel Social Security beneficiaries to file tax returns in order to simplify the Treasury Department’s job, so as not to hold up cash payments to other Americans. If accurate, this approach clearly penalizes seniors and the disabled. Older people are less likely to have internet access or to know how to use online tools in order to file electronic tax returns. Millions of seniors are in nursing homes and assisted living facilities currently on lockdown, limiting their access to IRS forms and the U.S. mail. Some may not have family members to help them file taxes.
At the same time, seniors living on fixed incomes need cash relief as much – or more – than other Americans suffering through the COVID-19 crisis. According to the National Institute on Retirement Security, 40% of all Social Security recipients rely on their monthly benefits to cover all of their living expenses. As the National Committee’s top Social Security expert, Webster Phillips, pointed out in this space two days ago, the $1,200 stimulus payment per individual (or $2,400 per couple) represents a considerable amount of extra income for Social Security beneficiaries, whose average monthly benefits are only about $1,500.
“If you’re living close to the edge financially, this is a significant amount of additional money. You could use it to buy extra groceries, an extended supply of prescription medications, pay down debts… there are a multitude of important things you could do with it.” – Webster Phillips, National Committee senior legislative representative
The National Committee and other advocates do not want to see a repeat of what happened in 2008, when Social Security recipients were required to file income taxes to receive stimulus payments at the start of the Great Recession. As a result, some 3.5 million beneficiaries who were unable to file returns received no stimulus payment at the onset of one of the worst financial crises in the nation’s history.
Today, at least 15 million Americans receiving Social Security are not required to file federal tax returns because their incomes are too low. Those are the last people that the Trump administration should be targeting, in complete contravention of the CARES relief act. The Trump Treasury Department and the I.R.S. must immediately clear up any doubt — and relieve America’s most vulnerable citizens of the obligation to file tax returns to get the cash payments they so badly need during this pandemic.