Advisory | | May 27, 2020
A friend who received his stimulus payment as an actual check in the mail, knew I was working on this article and suggested I take a look at what the IRS sent him. Examining the official looking envelope, I could see that the IRS makes it quite clear as to what anyone should do who receives a check addressed to a person who has passed away. In the upper righthand corner of the envelope, in bold, capitalized and underlined letters, the message reads:
IF RECIPIENT DECEASED
Directly below this are instructions to any surviving family members:
Check here and drop in mailbox.
The ‘check here’ refers to a box right next to the two-line message. And while it would be difficult to misinterpret what the IRS wants anyone to do with a check issued to a person no longer with us, some people may, for whatever reason, still open the envelope, endorse the check in the name of the deceased, and cash or deposit the funds. With unemployment near Great Depression levels, many people are experiencing financial issues and may simply need the money and choose to pay an electric bill, make a car payment, or purchase prescription medicine. Regardless of the reason, the IRS is very clear about the cost for doing so. Printed on the front of the envelope are the words:
“Forgery of endorsements on Treasury checks is a Federal crime. Maximum penalty is a $10,000 fine and ten years imprisonment.”
The bold face shown here is the same as it appears on the IRS envelope. So, why would anyone risk that kind of punishment for $1,200? The likelihood may be that it is someone who has not worked for two or three months, who has kids to feed and rent to pay, or another pressing financial obligation.
This same situation arose with another friend. Both members of the couple are employed in the hospitality business and have not worked at all since their state shut down their employers. On top of this, the father of one member of the couple died recently, but still received a stimulus payment after his demise. So, ironically, the couple used the money sent to their deceased dad to help pay the funeral expenses.
It is not unreasonable to wonder why deceased persons are getting stimulus checks in the first place. As reported by Fox6 News in Milwaukee, WI, a father whose son was fatally stabbed in November 2018 got a stark reminder of his loss when a stimulus check made out to his son arrived in the mail. Perhaps the most puzzling aspect to this sad story was that printed next to the son’s name on the check were the letters “DECD” for “deceased.” In other words, the IRS knew this person had died and still issued and mailed a check to him.
No one at this point knows how many deceased people received stimulus payments, or why. According to a May 8, 2020, report by National Public Radio, “A bipartisan group of lawmakers is demanding answers from the Treasury Department and the IRS about improper coronavirus relief checks paid out to deceased taxpayers.”
Many people received stimulus payments via direct deposit into a bank account. If a deceased person still had an active bank account after his demise, or had a joint account with a spouse, the stimulus payment for the deceased could land there in addition to the payment for the surviving spouse. Again, the IRS is quite clear on what they should do as explained in their on-line Economic Payment Information Center (https://bit.ly/2XfuAJG.)
- Q. Does someone who has died qualify for the Payment?
- A. No. A Payment made to someone who died before receipt of the Payment should be returned to the IRS by following the instructions in the Q&A 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.
If an IRS stimulus payment was sent to a deceased loved one, here is what you need to do to return it. First, go to the IRS information page at https://bit.ly/2XfuAJG. This is a Q&A page which covers questions relating to Economic Impact Payments. Question 54 in the “More About the Economic Impact Payment” section contains instructions on how to return an uncashed paper check, a payment that was received via direct deposit, or funds from a paper check that has already been cashed. You will also see a list of IRS addresses to use to return the funds based on the state in which you live.
Important to note about paper checks addressed to a deceased person: As described previously, the envelope in which EIP checks arrive have printed instructions telling the recipient to check the box on the front and drop it in the mail unopened. However, there have been multiple reports of the Post Office returning checks back to the recipient instead of the IRS when sent this way, and some have expressed concerns that the check could be lost or wind up in the wrong hands. The IRS instructions in this same section recommend writing “Void” in the endorsement area on the back of the check and returning to the IRS with a note stating the reason for returning the check.
And finally, while no deadline for the return of the stimulus money is given, our advice to those who may have received funds in error would be, “Don’t tarry. Do it now!”