IRS demands families return stimulus checks sent to dead relatives

IRS demands families return stimulus checks sent to dead relatives
Posted at 3:00 PM, May 07, 2020

THOUSAND OAKS, Calif. – As some families still wait for their stimulus checks from the government, thousands of Americans got an extra check for a relative who passed away. The IRS released guidelines Wednesday asking for that money back, but some experts argue that the law does not require it be returned.

Phyllis and Ken Tierstein received a stimulus payment for Phyllis’ father, John Petrella, who passed away in 2018 just after his 91st birthday.

“He was on dialysis, and so his kidneys just shut down,” said Phyllis.

When the Tiersteins looked at their latest bank statement, one deposit brought up an unexpected reminder of the loss.

“It wasn’t our stimulus money,” said Phyllis Tierstein. “We’d already received ours, so with further investigation, we figured out it was from my father.”

Petrella’s $1,200 stimulus check deposited into her account.

“John had a joint account with his daughter, but when he died all the accounts were closed, then it ended up in her account,” said Phyllis’ husband, Ken.

The couple called their accountant who believes these erroneous deposits are most likely an oversight by the IRS marking taxpayers who filed in 2018 or 2019 eligible for a payment, regardless of whether or not that filing was the final filing.

“They rushed to get it out and they didn’t dot every ‘i’ and cross every ‘t’ perfectly,” said CPA Michael Miller, of Miller Ward and Aziz.

“They didn’t look at the last filing of the tax return, and that it was a final filing,” said Ken Tierstein.

This filing confusion weighs more heavily now that John’s long-time companion, Rosa, is still anxiously awaiting her own stimulus check.

“It’s really sad to tell her ‘Gee, my deceased father got his check,’ and she’s living and she didn’t get hers,” Phyllis said.

And as many like her wait for their payments, President Donald Trump and Secretary of the Treasury Steve Mnuchin asked for all checks to the deceased be returned.

Some experts argue the law doesn’t force people to follow that suggestion.

“If you look through the law, if you look through the CARES Act, there is no claw back, there is no provision that says, ‘If you receive this, here’s what your legal obligation is,’” said Gordon Gray, Director of Fiscal Policy for the American Action Forum.

“The law is silent on whether or not they should give it back, but now you have the secretary of the treasury and the president of the United States saying people should give it back, so there’s a bit of a gap between should and must,” said Gray.

The IRS posted instructions for returning the money. Those who received paper checks for deceased relatives can void the check and mail it back to one of nine offices listed on the IRS website.

If you received the check via direct deposit—the IRS asks you mail in a personal check or money order, identifying the person that check went out to.

“Just putting out a blanket statement and thinking everybody is going to step up and do the right thing, I don’t think it will happen,” said Ken.

Even though the Tiersteins plan to step up and return their check, experts worry collecting the money will be a tough task.

“It’s going to be a slow, difficult process,” said Miller.