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Individuals Who Beat Sign-Up Deadline Will Get Dependents’ EIPs

Posted on Aug. 6, 2020

The IRS will begin distributing $500 economic impact payments (EIPs) to at least 365,000 individuals who registered their dependents by the agency’s deadline but were denied the money because of a software bug.

Direct deposit payments will be made starting August 5 to individuals who registered their dependents on the IRS’s nonfiler portal before the May 17 deadline, while checks and debit cards will be mailed starting August 7, according to an IRS statement and modification to the IRS’s FAQ made August 5.

Christine Speidel, co-counsel in McGruder v. Mnuchin, No. 2:20-cv-03590 (E.D. Pa. 2020), which challenges the IRS’s use of informal guidance, noted that FAQ #54, on who shouldn’t use the nonfiler portal, immediately follows the updated FAQ #53. The unchanged FAQ still tells nonfiler federal beneficiaries who received their $1,200 EIP but not the $500 dependent payment, including the McGruder plaintiffs, that they can't use the portal.

“It’s too early, based on these FAQs, to say whether the IRS is changing its position” on nonfiler dependents’ EIPs, or continuing to insist they file in 2021 to get their full payment, Speidel said. “It doesn’t say anything about that population.”

IRS Commissioner Charles Rettig testified to the Senate Finance Committee June 30 that as many as 365,000 individuals didn’t get their full EIP because of the agency’s software malfunction.

The Government Accountability Office estimated June 25 that the glitch may have deprived 450,000 individuals of their dependents’ EIPs.

Preliminary Injunction 

The plaintiffs in McGruder allege that the IRS and Treasury’s informal guidance on EIPs, including press releases and FAQs that were edited without notice, constituted an arbitrary and capricious use of authority in distributing stimulus money to disadvantaged individuals.

Attorneys for the McGruder complainants applied to the federal court July 31 for a preliminary injunction barring the IRS and Treasury from, among other things, continuing to deny EIPs to dependents of individuals entitled to them under the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136).

The August 5 modification of the IRS’s EIP FAQ No. 53 reflects the agency’s updated payment distribution plans.

In its statement, the IRS encouraged individuals to use its Get My Payment tool to track their dependents’ EIPs. Recipients should also expect to get a notice about their dependents’ EIPs by mail, the IRS said.

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