The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was signed into law on March 27, 2020. As part of the CARES Act, the U.S. Department of Treasury sent “Economic Impact Payments” of $1,200 to the majority of American adults. Although some individuals did not receive Economic Impact Payments for a variety of reasons, such as exceeding applicable income thresholds, one group of adults seem to be receiving payments even though their eligibility is questionable – the deceased.
If you are a Personal Representative of an estate, and the deceased person received an $1,200 Economic Impact Payment, can you simply say “Score!” and deposit that payment into the estate account for distribution to the heirs? Treasury Secretary Steven Mnuchin says no. “’You’re not supposed to keep that payment,”’ Mnuchin told the Wall Street Journal. “’We’re checking the databases, but there could be a scenario where we missed something, and yes, the heirs should be returning that money.”
According to NBC News, “The $2 trillion CARES Act passed by Congress last month doesn’t explicitly address the question, although it specifies that ‘an estate or trust’ is not eligible for a payment. But the law bases eligibility on people’s tax returns in 2019 or 2018. It’s unclear how that applies to people who, based on their 2019 taxes, were otherwise eligible but died at some point during that year.”
On May 6th, the IRS provided guidance as follows:
A Payment made to someone who died before receipt of the Payment should be returned to the IRS by following the instructions about repayments. Return the entire Payment unless the Payment was made to joint filers and one spouse had not died before receipt of the Payment, in which case, you only need to return the portion of the Payment made on account of the decedent. This amount will be $1,200 unless adjusted gross income exceeded $150,000.
So unfortunately, a Personal Representative should return an Economic Impact Payment sent out to a deceased individual. Please see this link for instructions on how to return the payment: https://www.irs.gov/coronavirus/economic-impact-payment-information-center.
This post is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting with an attorney.