Some information about stimulus checks and the deceased.

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tar...@google.com

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Apr 28, 2020, 4:22:00 PM4/28/20
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My son's stimulus check arrived in the mail yesterday and I noticed that on the envelope
there was a check-box for indicating that the recipient was deceased. Along with
instructions to check the box and then drop it in a mailbox. So it seems that at least with
the physical checks, the IRS is asking for them to be returned.

As for other cases, I noticed the following rather unhelpful statement from an IRS
spokesperson reported in "IRS is sending funds to the dead", Los Angeles Times,
April 27, 2020, pB1, B5:

"An IRS spokesman told The [Los Angeles] Times that the agency is 'very aware' of the
situation, considers it a high priority and is working on getting the public some answers."

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Elle Honda.Lioness

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Apr 28, 2020, 9:47:24 PM4/28/20
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On Tuesday, April 28, 2020 at 2:22:00 PM UTC-6, tar...@google.com wrote:
> My son's stimulus check arrived in the mail yesterday and I noticed that on the envelope
> there was a check-box for indicating that the recipient was deceased. Along with
> instructions to check the box and then drop it in a mailbox. So it seems that at least with
> the physical checks, the IRS is asking for them to be returned.
>
> As for other cases, I noticed the following rather unhelpful statement from an IRS
> spokesperson reported in "IRS is sending funds to the dead", Los Angeles Times,
> April 27, 2020, pB1, B5:
>
> "An IRS spokesman told The [Los Angeles] Times that the agency is 'very aware' of the
> situation, considers it a high priority and is working on getting the public some answers."

As executor of an estate, I too received a snail mailed $1200 stimulus check on behalf of the deceased. Thank you for pointing out what the envelope has on it. My envelope says the same. But I think complicating this is the fact that the check itself is made out as follows:

JONA SMITH DECD
JEAN JONES PER REP
1234 Main Street
Anytown, XY 67890

If this were a refund for the deceased's final form 1040, would the snail mailed check arrive in the same envelope? Would the check be made out to the deceased and personal representative (executor) of the estate as shown above?

The IRS is admitting it is making other mistakes in sending stimulus checks out. For these other mistakes, there are signs that the IRS is not going to try to get back the money.

I am hesitant to return the check given the conflicting information.

Thank you for posting this. I completely missed what was printed on the envelope. Maybe I missed it because: Social Security was promptly informed of the death last August. I submitted the required documents to the IRS stating I am executor. I submitted the decedent's final Form 1040 prominently noting (as completed by the software) that this was the final form 1040 for a decedent.

I am satisfied waiting a few months until the IRS's team of attorneys figures out what to do. I think one reason they may be dragging their feet is because, the IRS is in a dilemma. Either (1) announce that estates may keep the checks and distribute them to beneficiaries; or (2) the IRS will try to claw back checks from estates while ignoring the many checks sent out incorrectly to others. I think the first choice will cause a public outcry. I think the second choice will result in demands to go after all the checks that were sent out when they should not have been.

I started another thread on this several days ago.

Bob Sandler

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Apr 29, 2020, 4:48:58 PM4/29/20
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>> My son's stimulus check arrived in the mail yesterday and I noticed that on the envelope
>> there was a check-box for indicating that the recipient was deceased. Along with
>> instructions to check the box and then drop it in a mailbox. So it seems that at least with
>> the physical checks, the IRS is asking for them to be returned.
>>
>> "An IRS spokesman told The [Los Angeles] Times that the agency is 'very aware' of the
>> situation, considers it a high priority and is working on getting the public some answers."
>
>As executor of an estate, I too received a snail mailed $1200 stimulus check on behalf of the deceased. Thank you for pointing out what the envelope has on it. My envelope says the same. But I think complicating this is the fact that the check itself is made out as follows:
>
>I am hesitant to return the check given the conflicting information.

News articles in the last 24 hours are saying that the
Treasury Department says stimulus payments to deceased
people have to be returned.

Excerpts from Wall Street Journal article:
https://www.wsj.com/articles/stimulus-checks-sent-to-dead-relatives-should-be-returned-mnuchin-says-11588103323

Stimulus Checks Sent to Dead Relatives Should Be Returned,
Mnuchin Says

Their relatives and estates should pay the money back to the
government, Treasury Secretary Steven Mnuchin said Tuesday.

"You're not supposed to keep that payment," Mr. Mnuchin said
in an interview with The Wall Street Journal.

Mr. Mnuchin's comments mark the government's clearest
guidance to date on the issue.


Excerpts from Politico article:
https://www.msn.com/en-us/news/us/treasury-wants-stimulus-payments-to-dead-people-repaid/ar-BB13lfcG

Treasury wants stimulus payments to dead people repaid

Economic stimulus payments errantly sent to the deceased
should be returned, according to the Treasury Department.

A Treasury spokesperson indicated the department is
developing a plan to retrieve the coronavirus-related
payments.

Treasury Secretary Steven Mnuchin said "heirs should be
returning that money," in an interview with The Wall Street
Journal Tuesday.


Bob Sandler

JoeTaxpayer

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May 5, 2020, 1:25:12 PM5/5/20
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On 4/29/20 4:45 PM, Bob Sandler wrote
One would think it would take very little effort for the IRS to release
a definitive statement. "Direct deposits should returned to [address]
via check/mo with a note with XXX details. Checks should be sent, with
VOID written with black marker across the front, to [address]. "

When Munchkin first talked about delaying Tax Day, there were days of
confusion. Was the delay for payment due, or for filing as well? IRS
needs to get clarification and make a statement, in an official format.
They know how to do this, still.

[Note - to be clear, I am not offering a position on this. The check
made payable to my dear, departed, MIL sits on my desk, uncashed. Until
the IRS makes a formal declaration, all else is speculation.]

paultry

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May 5, 2020, 2:45:18 PM5/5/20
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On 5/5/2020 12:24, JoeTaxpayer wrote:
> One would think it would take very little effort for the IRS
> to release a definitive statement. "Direct deposits should
> returned to [address] via check/mo with a note with XXX
> details. Checks should be sent, with VOID written with black
> marker across the front, to [address]. "
>
> When Munchkin first talked about delaying Tax Day, there
> were days of confusion. Was the delay for payment due, or
> for filing as well? IRS needs to get clarification and make
> a statement, in an official format. They know how to do
> this, still.
>
> [Note - to be clear, I am not offering a position on this.
> The check made payable to my dear, departed, MIL sits on my
> desk, uncashed. Until the IRS makes a formal declaration,
> all else is speculation.]


Equally or perhaps more problematic will be joint checks
when one spouse has died. Returning the check delays
benefit to the surviving spouse. Cashing the check leaves
the surviving spouse on the hook for the deceased's share.

Elle Honda.Lioness

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May 5, 2020, 3:25:22 PM5/5/20
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Based on what happened around 2010, it seems conceivable that the IRS will "ask" for the stimulus payments (made out to decedents/estates) to be returned; provide the procedure for accomplishing this; but also be completely vague about whether a return of the stimulus payment is legally required. For example:

====Start Excerpt from Marketwatch.com article=====
This isn’t the first time the federal government has issued stimulus checks to the dead. More than 71,500 dead Social Security recipients received $250 stimulus payments under the American Recovery and Reinvestment Act, according to a 2010 report from the Social Security Administration’s Inspector General. Deceased Social Security recipients got $18 million of the $13 billion set aside for all Social Security recipients in that Obama-era stimulus package, the report said.

About half of those checks were returned, the Inspector General report estimated, when reviewing a sample of 50 beneficiaries.

“People may have returned it, but they didn’t need to,” said Nina Olson, the former head of the Taxpayer Advocate Service, an internal IRS watchdog. The same goes for the $1,200 stimulus payments, as far as Olson sees it. The CARES Act stimulus bill contained no “clawback” provisions for stimulus checks sent to a dead person, meaning the agency can’t retrieve the money after it’s been handed out, she said. “Congress didn’t write around that this year,” she said.
=====End Excerpt=========

To me this may leave some personal representatives in a quandary: Does the personal representative (PR) have a duty to the estate to distribute the stimulus check to the beneficiaries? Or should the estate and the PR be "shamed" into returning money from the U. S. Treasury that, if push comes to shove, legally belongs to the estate?

If either 364 days go by without clarification here, or this coming clarification does not sound like it has the law behind it, I will likely send the $1200 to the charity that is the estate's beneficiary and not think twice about it. It's my "Whatever" response, in the belief that the IRS is unlikely to come after me.

Give it a few more months, and as food shortages start, this may be the least of one's worries.

ira smilovitz

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May 8, 2020, 1:55:36 PM5/8/20
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On Tuesday, May 5, 2020 at 3:25:22 PM UTC-4, Elle Honda.Lioness wrote:
> Based on what happened around 2010, it seems conceivable that the IRS will "ask" for the stimulus payments (made out to decedents/estates) to be returned; provide the procedure for accomplishing this; but also be completely vague about whether a return of the stimulus payment is legally required. For example:
>
> ====Start Excerpt from Marketwatch.com article=====
> This isn’t the first time the federal government has issued stimulus checks to the dead. More than 71,500 dead Social Security recipients received $250 stimulus payments under the American Recovery and Reinvestment Act, according to a 2010 report from the Social Security Administration’s Inspector General. Deceased Social Security recipients got $18 million of the $13 billion set aside for all Social Security recipients in that Obama-era stimulus package, the report said.
>
> About half of those checks were returned, the Inspector General report estimated, when reviewing a sample of 50 beneficiaries.
>
> “People may have returned it, but they didn’t need to,” said Nina Olson, the former head of the Taxpayer Advocate Service, an internal IRS watchdog. The same goes for the $1,200 stimulus payments, as far as Olson sees it. The CARES Act stimulus bill contained no “clawback” provisions for stimulus checks sent to a dead person, meaning the agency can’t retrieve the money after it’s been handed out, she said. “Congress didn’t write around that this year,” she said.
> =====End Excerpt=========
>
> To me this may leave some personal representatives in a quandary: Does the personal representative (PR) have a duty to the estate to distribute the stimulus check to the beneficiaries? Or should the estate and the PR be "shamed" into returning money from the U. S. Treasury that, if push comes to shove, legally belongs to the estate?
>
> If either 364 days go by without clarification here, or this coming clarification does not sound like it has the law behind it, I will likely send the $1200 to the charity that is the estate's beneficiary and not think twice about it. It's my "Whatever" response, in the belief that the IRS is unlikely to come after me.
>
> Give it a few more months, and as food shortages start, this may be the least of one's worries.
>
> --

Here is a detailed analysis of why EIP payments to decedents do not need to be returned to the IRS, notwithstanding IRS FAQs to the contrary. The analysis was written by David M. Fogel, EA, CPA, USTCP. (For those who don't recognize the last acronym, it stands for Unites States Tax Court Practitioner. It means that David is a non-attorney who has been granted authority to represent clients in cases before the US Tax Court). He writes:

I'll provide my analysis, which is in several threads on the WebBoard. The simple situation is a single individual who died on July 1, 2018. His final Form 1040 for the period January 1, 2018 to July 1, 2018 was filed timely.

Under IRC 6428(f)(1), the advance stimulus payment is based first on the 2019 return. This section states:

(f) ADVANCE REFUNDS AND CREDITS.---
(1) IN GENERAL.---Subject to paragraph (5), each individual who was an eligible individual for such individual's first taxable year beginning in 2019 shall be treated as having made a payment against the tax imposed by chapter 1 for such taxable year in an amount equal to the advance refund amount for such taxable year.

So, this section states that an individual who was an "eligible individual" for the individual's year beginning in 2019 shall be entitled to the advance stimulus payment. The individual in our example fails this test because he died in 2018.

Under IRC 6428(f)(5), if no 2019 return has been filed, then the advance stimulus payment is based on the 2018 return. This section states:

(5) ALTERNATE TAXABLE YEAR.---In the case of an individual who, at the time of any determination made pursuant to paragraph (3), has not filed a tax return for the year described in paragraph (1), the Secretary may---
(A) apply such paragraph by substituting "2018" for "2019", and * * *

So, this section states that if the individual has not filed a 2019 return, then the IRS may substitute "2018" for "2019" in IRC 6428(f)(1). As a result, an individual who was an "eligible individual" for the individual's year beginning in 2018 shall be entitled to the advance stimulus payment. The individual in our example satisfies this test because he was alive beginning in 2018, and therefore, he is entitled to a $1,200 advance stimulus payment.

IRC 6428(e)(1) provides that the $1,200 advance stimulus payment doesn't have to be paid back. This section states:

(e) COORDINATION WITH ADVANCE REFUNDS OF CREDIT.---
(1) IN GENERAL.---The amount of credit which would (but for this paragraph) be allowable under this section shall be reduced (but not below zero) by the aggregate refunds and credits made or allowed to the taxpayer under subsection (f). Any failure to so reduce the credit shall be treated as arising out of a mathematical or clerical error and assessed according to section 6213(b)(1).

Under IRC 6428(d)(3), an estate is not an "eligible individual." The amount of the credit for 2020 is zero because the individual died in 2018. Under IRC 6428(e)(1), the zero credit is reduced by the $1,200 advance stimulus payment, resulting in a number that is below zero. As a result, the advance stimulus payment doesn't have to be paid back due to the "(but not below zero)" language.

Some might point to the word "may" in IRC 6428(f)(5) (above) and say that the IRS doesn't have to substitute "2018" for "2019," and this gives the IRS the right to demand that the advance stimulus payment be paid back. But if the $1,200 payment has already been made to an individual who died in 2018, then the IRS has already used its discretionary power, has chosen 2018 as the alternate taxable year upon which to base the advance stimulus payment, and therefore may not demand repayment.

Unless and until Congress changes the law, checks issued under this statute to an eligible individual who died during 2018 are proper. The same applies to an eligible individual who died during 2019, or who died during 2020 but before the IRS made the determination to issue an advance stimulus payment.

--- end of David M. Fogel's analysis ---

Ira Smilovitz, EA
Leonia, NJ

Elle Honda.Lioness

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May 8, 2020, 7:41:05 PM5/8/20
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On Friday, May 8, 2020 at 11:55:36 AM UTC-6, ira smilovitz wrote:
[Quoting David M. Fogel, EA, CPA US Tax Court Practitioner, apparently posting at webboard.naea.org, a private web site?]
[snip]
> Under IRC 6428(f)(1), the advance stimulus payment is based first on the 2019 return. This section states:
>
> (f) ADVANCE REFUNDS AND CREDITS.---
> (1) IN GENERAL.---Subject to paragraph (5), each individual who was an eligible individual for such individual's first taxable year beginning in 2019 shall be treated as having made a payment against the tax imposed by chapter 1 for such taxable year in an amount equal to the advance refund amount for such taxable year.
>
> So, this section states that an individual who
> was an "eligible individual" for the individual's
> year beginning in 2019


To process the above, and for a person who died in 2019, I had to think this through as follows:

For the "taxable year," is the "individual" (whose 2019 Form 1040 was filed with "Deceased" et cetera printed at the top) an estate?

The 2019 Form 1040 was prepared by the estate's representative. The Form 1040 was not prepared using income into the estate. The income tax paid on a Form 1040 is income tax paid because of income a living individual received during 2019.

Nina Olson and others said several weeks ago that the estates of dead people may lawfully receive the stimulus payment on the basis of the AGI on their final 2019 Form 1040.

At this writing I believe Ms. Olson and these other folks are correct.

If anyone sees this differently, I would be interested in your comments.

Next I get to try to claw back the check I mailed to the IRS "immediately" per the IRS's direction.

The stupidity and disgust I have with myself and the IRS runs deep.

Ira Smilovitz, thank you for posting this.

ira smilovitz

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May 8, 2020, 9:21:12 PM5/8/20
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On Friday, May 8, 2020 at 7:41:05 PM UTC-4, Elle Honda.Lioness wrote:
> On Friday, May 8, 2020 at 11:55:36 AM UTC-6, ira smilovitz wrote:
> [Quoting David M. Fogel, EA, CPA US Tax Court Practitioner, apparently posting at webboard.naea.org, a private web site?]
> [snip]
> > Under IRC 6428(f)(1), the advance stimulus payment is based first on the 2019 return. This section states:
> >
> > (f) ADVANCE REFUNDS AND CREDITS.---
> > (1) IN GENERAL.---Subject to paragraph (5), each individual who was an eligible individual for such individual's first taxable year beginning in 2019 shall be treated as having made a payment against the tax imposed by chapter 1 for such taxable year in an amount equal to the advance refund amount for such taxable year.
> >
> > So, this section states that an individual who
> > was an "eligible individual" for the individual's
> > year beginning in 2019
>
>
> To process the above, and for a person who died in 2019, I had to think this through as follows:
>
> For the "taxable year," is the "individual" (whose 2019 Form 1040 was filed with "Deceased" et cetera printed at the top) an estate?
>
> The 2019 Form 1040 was prepared by the estate's representative. The Form 1040 was not prepared using income into the estate. The income tax paid on a Form 1040 is income tax paid because of income a living individual received during 2019.
>
> Nina Olson and others said several weeks ago that the estates of dead people may lawfully receive the stimulus payment on the basis of the AGI on their final 2019 Form 1040.
>
> At this writing I believe Ms. Olson and these other folks are correct.
>
> If anyone sees this differently, I would be interested in your comments.
>
> Next I get to try to claw back the check I mailed to the IRS "immediately" per the IRS's direction.
>
> The stupidity and disgust I have with myself and the IRS runs deep.
>
> Ira Smilovitz, thank you for posting this.
>
> --

Yes, I see the major "problem" is that many people think the decedent and the estate are the same thing, just on opposite sides of the date of death. They are separate legal "persons".

Ira Smilovitz, EA
Leonia, NJ

Taxed and Spent

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May 8, 2020, 11:51:23 PM5/8/20
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I am reading the CARES Act, and see the following:

SEC. 6428. 2020 RECOVERY REBATES FOR INDIVIDUALS.
(a) IN GENERAL.—In the case of an eligible individual, there shall be
allowed as a credit against the tax imposed by subtitle A for the first
taxable year beginning in 2020 an amount equal to the lesser of . . .

I do not see any section 6428(f)(5)

ira smilovitz

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May 9, 2020, 11:07:13 AM5/9/20
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You haven't read far enough or you don't understand code citations. The snippet you quoted is the beginning of 6428(a).

Ira Smilovitz, EA
Leonia, NJ

Stuart O. Bronstein

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May 9, 2020, 12:02:18 PM5/9/20
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ira smilovitz <ira.sm...@gmail.com> wrote:
> Taxed and Spent wrote:
>> ira smilovitz wrote:
>> > Elle Honda.Lioness wrote:

>> > Unless and until Congress changes the law, checks issued under
>> > this statute to an eligible individual who died during 2018 are
>> > proper. The same applies to an eligible individual who died
>> > during 2019, or who died during 2020 but before the IRS made
>> > the determination to issue an advance stimulus payment.
>> >
>> > --- end of David M. Fogel's analysis ---
>>
>> I am reading the CARES Act, and see the following:
>>
>> SEC. 6428. 2020 RECOVERY REBATES FOR INDIVIDUALS.
>> (a) IN GENERAL.—In the case of an eligible individual, there
>> shall be allowed as a credit against the tax imposed by subtitle
>> A for the first taxable year beginning in 2020 an amount equal to
>> the lesser of . . .
>>
>> I do not see any section 6428(f)(5)
>
> You haven't read far enough or you don't understand code
> citations. The snippet you quoted is the beginning of 6428(a).

Right. Here's what it says in section 6428(f)(3)(C):

"Except in cases of fraud or reckless neglect, no liability under
sections 3325, 3527, 3528, or 3529 of title 31, United States Code,
shall be imposed with respect to payments made under this
subparagraph."

--
Stu
http://DownToEarthLawyer.com

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Taxed and Spent

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May 9, 2020, 4:47:39 PM5/9/20
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On 5/9/2020 9:00 AM, Stuart O. Bronstein wrote:
> ira smilovitz <ira.sm...@gmail.com> wrote:
>> Taxed and Spent wrote:
>>> ira smilovitz wrote:
>>>> Elle Honda.Lioness wrote:
>
>>>> Unless and until Congress changes the law, checks issued under
>>>> this statute to an eligible individual who died during 2018 are
>>>> proper. The same applies to an eligible individual who died
>>>> during 2019, or who died during 2020 but before the IRS made
>>>> the determination to issue an advance stimulus payment.
>>>>
>>>> --- end of David M. Fogel's analysis ---
>>>
>>> I am reading the CARES Act, and see the following:
>>>
>>> SEC. 6428. 2020 RECOVERY REBATES FOR INDIVIDUALS.
>>> (a) IN GENERAL.—In the case of an eligible individual, there
>>> shall be allowed as a credit against the tax imposed by subtitle
>>> A for the first taxable year beginning in 2020 an amount equal to
>>> the lesser of . . .
>>>
>>> I do not see any section 6428(f)(5)
>>
>> You haven't read far enough or you don't understand code
>> citations. The snippet you quoted is the beginning of 6428(a).
>
> Right. Here's what it says in section 6428(f)(3)(C):
>
> "Except in cases of fraud or reckless neglect, no liability under
> sections 3325, 3527, 3528, or 3529 of title 31, United States Code,
> shall be imposed with respect to payments made under this
> subparagraph."
>


Those sections seem to pertain to liability of government officials, not
taxpayers.

ira smilovitz

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May 9, 2020, 8:22:57 PM5/9/20
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Correct. The subparagraph Stu cited does pertain to liability of government officials. I don't know why he quoted that. The paragraph you couldn't find (6428(f)(5)) is:

“(5) ALTERNATE TAXABLE YEAR.—In the case of an individual who, at the time of any determination made pursuant to paragraph (3), has not filed a tax return for the year described in paragraph (1), the Secretary may—

“(A) apply such paragraph by substituting ‘2018’ for ‘2019’, and

“(B) if the individual has not filed a tax return for such individual’s first taxable year beginning in 2018, use information with respect to such individual for calendar year 2019 provided in—

“(i) Form SSA–1099, Social Security Benefit Statement, or

“(ii) Form RRB–1099, Social Security Equivalent Benefit Statement.

Ira Smilovitz, EA
Leonia, NJ

Taxed and Spent

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May 10, 2020, 12:23:18 AM5/10/20
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Thank you. My copy of the CARES Act was corrupted.

I believe the real issue to be: is a decedent "an individual". I don't
think so.

Elle Honda.Lioness

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May 10, 2020, 1:19:26 PM5/10/20
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On Saturday, May 9, 2020 at 10:23:18 PM UTC-6, Taxed and Spent wrote:
> I believe the real issue to be: is a decedent "an individual". I don't
> think so.

The questions arising from the CARES Act are interesting. I hope those with significant credentials will continue to put up with my efforts to get a handle on the tax law here. Here's my take on answer to the above question:

>From Title 26, Internal Revenue Code, section 7701 (26 USC 7701) "Definitions":
=== Start Excerpt ===
(a)When used in this title, where not otherwise distinctly expressed or manifestly incompatible with the intent thereof—

(1)Person
The term “person” shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation.
.
.
.
(14)Taxpayer
The term “taxpayer” means any person subject to any internal revenue tax.

===== End Excerpt ===

Deceased individuals are obliged to pay income tax on their final Form 1040. While the funds for paying this income tax may come from the decedent's estate, the income tax owed is based on the deceased individual's income for the period she or he was alive during the tax year. The income tax is not a tax on the estate per se. It is a tax on the deceased individual's income while alive.

Likewise, a deceased individual can recover credits, like the Earned Income Tax Credit, on their final Form 1040. The EITC money will end up in the estate, but again, the EITC credit is not a credit to the estate per se. It is a credit to the dead person.

To me, all of the above indicate that an "individual" may be a dead person.

I think Ira concisely nailed the difficulty laypeople like myself were (or are) having: Laypeople are thinking that "estate" and "dead person" are the same thing in tax law. This is not so.

Questions similar to the above have arisen in, for one, lawsuits about who is and is not required to pay taxes. On this issue of whether a 'dead person' is entitled to a stimulus payment, I continue to try to parse the language. I am especially pondering David Fogel's argument. (I would bet this is Nina Olson's argument as well.) I am trying to see if I can find any holes in David's reasoning. I think of hypotheticals and try to see if David Fogel's reasoning still holds water. E.g. suppose the IRS was in court arguing against Nina and David that the stimulus checks sent to dead people are "erroneous refunds."

Internal Revenue Service:
Your honor, the CARES Act says estates are not eligible individuals. This supercedes IRC Section 6428 (f) (1).

Nina Olson:
Your honor, being a "dead person" is not the same as being an "estate." [Olson reviews all the arguments I made to date in misc.taxes.moderated, thanks to Ira's excerpt of David Fogel's discussion.]

Internal Revenue Service:
Your honor, please consider that, if a stimulus check had not been sent to the dead person, then the CARES Act does not give the dead person a way to force the IRS to issue a check. The CARES Act gives individuals who are alive the chance to claim the stimulus dollar amount on her or his 2020 Form 1040. But of course, in 2021, no person who died in 2018 or 2019 can file a 2020 Form 1040. To the IRS, it is clear that Congress did not intend for dead people to receive the stimulus payment.

Nina Olson:
We are trying to divine Congress's intent here. The CARES Act limits the time the Sec Treasury has to send out stimulus checks. Section 6428 (f) (3) prohibits advance refunds to be sent out after Dec 31, 2020. The CARES Act necessarily put a time limit on this rush to send out the people's money in the form of an "advance credit" or "advance refund" on people's 2020 income taxes. I do not think it is inconsistent to say Congress wanted this money flowing through the veins of the economy as quickly as possible, so yes, Congress absolutely intended for some dead people to get the money. Their heirs et cetera benefit from the stimulus payment. The stimulus payment is accomplishing its objective. On the other hand, there is this time limit, and the IRS has some discretion in sending out checks. On the third hand, once the check is sent to a dead person, then there is no way the IRS can lawfully re-claim it.

Judge:
I have a ruling. Is there a conflict between 6428 (d) (3) and 6428 (f) (1)? No. Those dead people (dying in either 2018 or 2019) who received stimulus checks in 2020 get to keep them.

However, no 'dead person' may have her or his agent stand in court and demand that the IRS send the dead person the amount of her or his stimulus payment. The CARES Act is uni-directional: The IRS decides who the IRS will send a refund in advance of filing in 2021 a 2020 Form 1040 tax return. Members of the public (dead or alive) do not get to tell the IRS (or make demands of the IRS) to send the stimulus payment in 2020. When 2021 comes, everyone who is legally permitted to file a tax return may get the stimulus payment (if they have not already) in the form of a refund/credit. In 2021, the Internal Revenue Code prohibits those who died in 2018 or 2019 from filing an individual tax return. So in this respect and by 2021, the decedents are out of luck.

Internal Revenue Service and Ms. Olson, on the issue of whether dead people receiving stimulus payments in 2019 may keep these payments, I rule for the dead people.

Taxed and Spent

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May 10, 2020, 2:59:34 PM5/10/20
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It is easy to win your argument when you get to play both sides and the
judge to boot! :)

I don't buy your argument that a dead person is "an individual". When a
person dies, his liabilities and credits with respect to his Individual
Income Tax ends, even though his representative may deal with such
matters after his death.

I bet the IRS punts and does nothing other than beg for the money back.
The people who pay the vast majority of the taxes are not getting any
stimulus checks, so the IRS will let the rest off the hook.

Elle Honda.Lioness

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May 10, 2020, 4:04:39 PM5/10/20
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On Sunday, May 10, 2020 at 12:59:34 PM UTC-6, Taxed and Spent wrote:
> I don't buy your argument that a dead person is "an individual". When a
> person dies, his liabilities and credits with respect to his Individual
> Income Tax ends, even though his representative may deal with such
> matters after his death.



I think you're saying that --

-- "dead person" and "estate" are synonymous (with no citation from the IRC to back up your contention)

-- IRC Section 6428 (d) prohibits estates from being "eligible individuals";

-- Therefore, dead people are not eligible to receive the stimulus payment.


To me the problem with your argument is that --

-- numerous IRS publications and sections of the IRC refer to "the individual." In the case of a final Form 1040 for someone who died, this frequently refers to a "dead person."

-- nowhere does the IRC say an "individual" may not be a dead person.

If it's just "common sense" to you, then I think that's why CPAs, EAs, tax attorneys and the like are paid the big bucks.

Elle Honda.Lioness

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May 10, 2020, 4:14:40 PM5/10/20
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On Sunday, May 10, 2020 at 12:59:34 PM UTC-6, Taxed and Spent wrote:
> It is easy to win your argument when you get to play both sides and the
> judge to boot! :)

It's not 'my argument.' It is David Fogel's and I bet Nina Olson's. I wanted to see if I could rebut it. After a lot of study, I cannot.

If you do not believe me, consider that I returned the stimulus payment, made payable to a dead person, to the IRS earlier this week. This is because I was naively dug into "estates" = "dead people." I wish I felt right now that I was correct to return the check to the IRS. I would feel a lot better. Instead, and after reviewing David Fogel's reasoning, I feel that the stimulus check did lawfully belong to the estate, and the IRS would have no legal possibility of clawing it back from me. I should have kept the check and distributed it to the beneficiary.

It is demoralizing realizing I committed a mistake that shortchanges the beneficiary (a charity) $1200.

I am not beating myself up too much. But I am feeling dismayed and sad about it.

JoeTaxpayer

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May 11, 2020, 10:56:09 AM5/11/20
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On 5/10/20 4:14 PM, Elle Honda.Lioness wrote:
>
> It is demoralizing realizing I committed a mistake that shortchanges the beneficiary (a charity) $1200.
>
> I am not beating myself up too much. But I am feeling dismayed and sad about it.
>

I'm still holding the check.
In my case, it's payable to my mother in law who passed in October. I am
the executor of her estate, and trustee of her trust. The beneficiaries
are my wife and sister in law. Since we don't need or want the money,
it's my job to manage it and disburse funds to her at least annually.
It's $1200 that for her can make a difference as she's working but
running paycheck to paycheck.

Taxed and Spent

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May 11, 2020, 11:06:10 AM5/11/20
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On 5/10/2020 1:02 PM, Elle Honda.Lioness wrote:
> On Sunday, May 10, 2020 at 12:59:34 PM UTC-6, Taxed and Spent wrote:
>> I don't buy your argument that a dead person is "an individual". When a
>> person dies, his liabilities and credits with respect to his Individual
>> Income Tax ends, even though his representative may deal with such
>> matters after his death.
>
>
>
> I think you're saying that --
>
> -- "dead person" and "estate" are synonymous (with no citation from the IRC to back up your contention)
>
> -- IRC Section 6428 (d) prohibits estates from being "eligible individuals";
>
> -- Therefore, dead people are not eligible to receive the stimulus payment.
>

No, that is not what I am saying. I am saying that upon death, "the
individual" ceases to exist. While not explicitly stated in the code or
regulations, it is consistent with their provisions.

Elle Honda.Lioness

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May 11, 2020, 12:11:16 PM5/11/20
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On Monday, May 11, 2020 at 9:06:10 AM UTC-6, Taxed and Spent wrote:
> I am saying that upon death, "the
> individual" ceases to exist. While not explicitly stated in the code or
> regulations, it is consistent with their provisions.

Your contention is consistent with neither Internal Revenue Service provisions nor the Internal Revenue Code.

Stuart O. Bronstein

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May 11, 2020, 2:26:28 PM5/11/20
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Taxed and Spent <nospam...@nonospam.com> wrote:

> No, that is not what I am saying. I am saying that upon death,
> "the individual" ceases to exist. While not explicitly stated in
> the code or regulations, it is consistent with their provisions.

As I read the legislation, someone only has to be an "individual" for
the relevant tax year that a tax return (Form 1040) was filed. The way
it is written, it doesn't imply someone needsd to be an "individual"
when the payment is made.

--
Stu
http://DownToEarthLawyer.com

--
This email has been checked for viruses by AVG.
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Taxed and Spent

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May 11, 2020, 6:36:51 PM5/11/20
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On 5/11/2020 11:25 AM, Stuart O. Bronstein wrote:
> Taxed and Spent <nospam...@nonospam.com> wrote:
>
>> No, that is not what I am saying. I am saying that upon death,
>> "the individual" ceases to exist. While not explicitly stated in
>> the code or regulations, it is consistent with their provisions.
>
> As I read the legislation, someone only has to be an "individual" for
> the relevant tax year that a tax return (Form 1040) was filed. The way
> it is written, it doesn't imply someone needsd to be an "individual"
> when the payment is made.
>


That is not the way I read it.

Stuart O. Bronstein

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May 11, 2020, 8:22:01 PM5/11/20
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Taxed and Spent <nospam...@nonospam.com> wrote:

> That is not the way I read it.

Where did your law degree come from?

--
Stu
http://DownToEarthLawyer.com

--
This email has been checked for viruses by AVG.
https://www.avg.com

Taxed and Spent

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May 15, 2020, 10:44:21 AM5/15/20
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On 5/11/2020 5:20 PM, Stuart O. Bronstein wrote:
> Taxed and Spent <nospam...@nonospam.com> wrote:
>
>> That is not the way I read it.
>
> Where did your law degree come from?
>


My law degree came from a lot of hard work and the burning of midnight
oil while I attended the law school of a well regarded university.

Other attorneys may come to different conclusions, but I believe my
legal analysis is sound. Will a court of competent jurisdiction concur?
Maybe yes, maybe no. But I doubt we will ever have the opportunity to
find out.

honda....@gmail.com

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Mar 8, 2021, 8:54:12 PMMar 8
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On Sunday, May 10, 2020 at 2:14:40 PM UTC-6, honda lioness wrote:
> It is demoralizing realizing I committed a mistake that shortchanges the beneficiary (a charity) $1200.
>
> I am not beating myself up too much. But I am feeling dismayed and sad about it.

To recap:
Last year around late April, the IRS posted on its web site that executors (of estates) "should" return "immediately" any stimulus payment received for anyone who died in 2019 (and 2020?). I followed the IRS's direction. After discussion here, and as this thread shows, I changed my position. By mid-May I became convinced that estates are entitled to keep any stimulus payment sent to the deceased individual.

Update:
In early May of last year, I wrote the IRS in an attempt to claw back the $1200 that I returned to the IRS. I quoted IRC Section 6428 (f) (1) and explained my reasoning in half a page, single spaced. The reasoning is pretty much as I presented it in this thread. I told the IRS I had a fiduciary duty to try to recover the stimulus payment on behalf of the beneficiary (a large, nationally known charity).

Today I received a letter, dated early March, 2021, from the IRS. The IRS addressed the letter to 'Jane Doe, Deceased, Elle Navorski, Personal Rep." The letter states the IRS is "working on your account" and needs a couple more months to send me a "complete response on what action [the IRS is] taking on your account."

I look forward to the IRS response, even if the response is merely entertaining and not substantive as far as the estate is concerned. I figure the response will be either (1) a mealy-mouthed, "We're keeping it."; (2) "You want it back? Sue us."; or (3) a new check, made out to the deceased, with me as personal representative.

JoeTaxpayer

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Mar 10, 2021, 8:21:31 AMMar 10
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On 3/8/21 8:50 PM, honda....@gmail.com wrote:
> On Sunday, May 10, 2020 at 2:14:40 PM UTC-6, honda lioness wrote:
>> It is demoralizing realizing I committed a mistake that shortchanges the beneficiary (a charity) $1200.
>>
>> I am not beating myself up too much. But I am feeling dismayed and sad about it.
>
> To recap:
> Last year around late April, the IRS posted on its web site that executors (of estates) "should" return "immediately" any stimulus payment received for anyone who died in 2019 (and 2020?). I followed the IRS's direction. After discussion here, and as this thread shows, I changed my position. By mid-May I became convinced that estates are entitled to keep any stimulus payment sent to the deceased individual.
>
> Update:
> In early May of last year, I wrote the IRS in an attempt to claw back the $1200 that I returned to the IRS. I quoted IRC Section 6428 (f) (1) and explained my reasoning in half a page, single spaced. The reasoning is pretty much as I presented it in this thread. I told the IRS I had a fiduciary duty to try to recover the stimulus payment on behalf of the beneficiary (a large, nationally known charity).
>
> Today I received a letter, dated early March, 2021, from the IRS. The IRS addressed the letter to 'Jane Doe, Deceased, Elle Navorski, Personal Rep." The letter states the IRS is "working on your account" and needs a couple more months to send me a "complete response on what action [the IRS is] taking on your account."
>
> I look forward to the IRS response, even if the response is merely entertaining and not substantive as far as the estate is concerned. I figure the response will be either (1) a mealy-mouthed, "We're keeping it."; (2) "You want it back? Sue us."; or (3) a new check, made out to the deceased, with me as personal representative.
>
Interesting to see this. I felt strongly about this in the same way,
that I have a responsibility to the beneficiary, my sister-in-law, as my
wife is not going to request any withdrawals. I managed my in-laws'
money with an eye towards the end game, that my mother in law would e
able to pay for her own care and not be in a medicaid funded facility.
As the trusted fiduciary (the executor of her will and trustee of the
remaining trust account) I deposited the check, and braced myself for a
letter that it needed to be returned. Of course, that never came.

Looking forward to your next update!
Be well.

honda....@gmail.com

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Jun 14, 2021, 6:52:02 PMJun 14
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Update:
The IRS letter I received on March 8, 2021 said the IRS needed an additional 60 days to send me a complete response. Over 90 days has passed. Today I called the IRS. I was on hold for half an hour, then I spoke to an IRS staffer who had me on hold off-and-on throughout the call, as the IRS staffer tried to get a handle on the two pieces of correspondence between the IRS and me on this matter. About 1.5 hours later, the IRS staffer instructed me to file a Form 1310, titled "Statement of Person Claiming Refund Due a Deceased Taxpayer." I believe the IRS staffer's (or his supervisor's) idea was either that I could:

-- amend the decedent's 2019 taxes and claim the refund. I do not see IRC authority for this for tax year 2019.

-- file a 2020 tax return for the decedent. Among other problems with the latter approach, I am pretty sure the Internal Revenue Code section for the first round of stimulus payments ($1200 for most single people) indicates this is not allowed.

-- give up with the attempt to claw back the $1200.

I think this battle's over. I salute the IRS for successfully de-frauding many decedents (and so their estates' beneficiaries) nationwide of $1200 per decedent. I own the role of my own incompetence, trusting the government to be honest.
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