Senators press IRS chief on stimulus check pitfalls

Senators on Tuesday pressed IRS Commissioner Charles Rettig about difficulties surrounding this year’s stimulus checks, as lawmakers start debating whether to create another round of payments in any future COVID-19 legislation.

Rettig’s appearance on Capitol Hill comes as Congress is about to leave town for the July 4 recess, but lawmakers are expected to start crafting a potential coronavirus relief package upon their return. Democrats, in particular, want that legislation to include stimulus checks similar to the ones that were included in the CARES Act, signed into law in late March.

“So far, approximately 160 million economic impact payments have been distributed, totaling approximately $270 billion,” Rettig said at a Senate Finance Committee hearing, his first Capitol Hill testimony since the pandemic began. “However, there is more to do. The IRS remains focused on making sure every eligible American receives a payment.”

The CARES Act provided one-time direct payments of up to $1,200 per adult and $500 per child for most Americans.

Senators on both sides of the aisle have praised the IRS for getting the vast majority of those payments to people quickly. But on Tuesday they had questions about some of the problem areas.

Lawmakers said they want to ensure direct payments get distributed as intended, and that payments get to people who need them the most.

“When we’re talking about another COVID package, one of the things on the table is an additional $1,200 payment, which I hope will actually happen,” Sen. Debbie Stabenow (D-Mich.) said. “Given that, what should we be doing in the current round in terms of getting people the payments that they deserve? In any future rounds, what should the strategy be with Congress?”

Rettig said that there have been some “lessons learned,” particularly when it comes to outreach. He said that the IRS has created tool kits for lawmakers and organizations to help make people aware that they are eligible for payments, and that the IRS has put out materials in more than two dozen different languages.

He also said that the IRS is making it a priority to reissue checks in cases where payments were sent to incorrect bank accounts.

Senate Finance Committee Chairman Chuck Grassley (R-Iowa) asked Rettig about a finding in a recent Government Accountability Office report that hundreds of thousands of people who provided information about their dependents to the IRS through the agency’s non-filer web tool did not receive $500 payments for their children.

Rettig said there were about 365,000 people who had not been given the payments for their children even though they used the non-filer tool, and that the IRS plans to issue additional payments to this group this summer. Many of these people receive Social Security benefits, he said.

Grassley and Sen. Maggie Hassan (D-N.H.) also asked Rettig about whether Social Security recipients who missed a deadline in April for using the non-filer tool will be able to get payments for their dependents this year. The IRS previously said Social Security recipients who missed deadlines to use the web tool would not be able to get the payments for their children until they file tax returns next year.

Rettig said the IRS was examining the issue of Social Security recipients who missed the deadline to use the non-filer tool, but that he couldn’t yet make a commitment about how the IRS would handle people in that situation.

“We have some limitations on abilities and capacities to move things through, but we’re sympathetic with trying to get as much funds out to as many people as possible as quickly as possible,” he said.

Grassley also wanted answers from Rettig about why the IRS initially sent stimulus checks to dead people.

Rettig said the agency first followed the procedures it used for stimulus payments it issued in 2008. But after it had been issuing payments for three weeks, the Treasury Department issued guidance indicating that dead people shouldn’t be getting payments, so the IRS changed its processing, he said.

Sen. Catherine Cortez Masto (D-Nev.) expressed concerns about some instances in which domestic violence survivors are not getting their payments. 

Rettig said he thinks “every person at the Internal Revenue Service is very sympathetic, understanding and would like to assist any victim of domestic violence.”

It remains to be seen whether a future coronavirus relief package will include direct payments. House Democrats passed a bill in May that would include a second round, but the Republican-controlled Senate has no plans to take it up.

President Trump has indicated interest in another round of payments, though some Republican lawmakers are concerned that more payments would be expensive and not well targeted.

In addition to asking Rettig about trouble spots, senators also asked him about the use of another relief tool created by the CARES Act: the employee retention tax credit, a payroll tax break that eligible businesses can receive for wages and health care benefits paid through the end of the year.

Sen. Mark Warner (D-Va.) encouraged the IRS to create a version of a form related to the credit that can be e-filed rather than faxed. Rettig was noncommittal.

Rettig also spoke about Treasury and the IRS’s announcement that they would not extend the July 15 tax-filing deadline. The deadline had been postponed from April 15 to July 15 in March because of the pandemic.

Rettig said the decision was ultimately made by Treasury, and that the administration discussed the issue with states and with organizations representing lawyers and accountants. He noted the IRS offering a host of payment options for taxpayers who can’t pay in full by July 15.

The IRS commissioner said that for taxpayers, particularly for those who are self-employed, “too many dates begins to get a little confusing in the trenches, and so giving some degree of certainty that they can move to and having us exercise discretion on the back end I think is the proper path forward.“