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IRS to Notify Millions Who Missed Out on Relief Payments

Posted on Sep. 18, 2020

Almost 9 million people will be sent IRS instructions on how to claim their overdue economic impact payments (EIPs) as the tax agency and tax professionals intensify their outreach to low-income and indigent individuals.

The IRS released state-by-state tallies of the number of individuals the agency hopes to reach with its latest pleas “so that state and local leaders and organizations can better understand the size of this population in their communities and assist them in claiming these important payments,” IRS Commissioner Charles Rettig said in a September 17 statement. “Time is running out to claim a payment before the deadline.”

The Center on Budget and Policy Priorities estimated that 12 million people are eligible for EIPs but haven’t filed an online IRS form to claim their funds.

Former National Taxpayer Advocate Nina Olson called the IRS’s information “very helpful.”

“But the target audience isn’t really the tax professional community,” Olson told Tax Notes. “It is the community groups who provide assistance to this low-income population and towns and cities with these populations.” 

“It shows where there are concentrations of folks, by ZIP code, who have not yet received the EIP. It allows the nonprofits and local governments to focus their outreach efforts on those ZIP codes and not take a scattershot approach,” Olson said.

Notice 1444-A, which the IRS will send in English and Spanish, advises nonfilers to claim an EIP through the agency’s online nonfilers tool by October 15. Individuals can also wait until next year to claim an EIP on their 2020 federal tax return.

The IRS letter will be mailed to 8.86 million individuals who don’t usually file a tax return but who may be eligible for an EIP of up to $1,200 for individual filers, up to $2,400 for married couples filing jointly, and $500 for each qualifying child. The EIPs are meant to ameliorate the effects of the coronavirus pandemic.

The IRS’s state-by-state account ranges from 1.18 million EIP payments missed in California to 13,365 still due in Vermont. The U.S. armed forces accounted for 5,795 of the letters the IRS plans to send. 

Come and Get It 

Given that the IRS’s deadline for registering for relief payments is October 15, “conducting the mailing this week seems more than a bit late to achieve best results,” said Nancy Abramowitz of the federal tax clinic at American University. “But better late than never. Communication and broad outreach are now the key.”

Tax practitioners could be key participants in the effort to distribute pandemic emergency money.

Agostino & Associates PC sent email blasts to thousands of individuals and contacted “every pastor, priest, imam, and rabbi” in New York and New Jersey in hopes of reaching what CEO Frank Agostino called “the last mile [of] people that are off the grid.”

Agostino said his firm has also reached out to homeless and women’s shelters, foreign consulates and missions, foreign language speakers at embassies, and foreign language TV and radio stations and news outlets. It also contacted New York and New Jersey elected representatives in an effort to reach the two states’ combined 753,871 individuals still awaiting EIPs.

Next, Agostino said, he’ll contact public housing directors in both states.

“We are going to miss lots of taxpayers,” Agostino told Tax Notes. “I need more interpreters, and the ability to meet face-to-face with groups of taxpayers at the housing authority community centers, with an IRS [Taxpayer Advocate Service] person to give us transcripts, and computer operators to verify identities.” 

‘Last-Mile’ Taxpayers 

Olson said she’s still concerned that the IRS is sending people to its nonfiler portal, even though taxpayers using the portal can’t claim the earned income tax credit or other refundable credits without also filing a tax return.

“The IRS has at least put this information at the bottom of its notice, but you have to wade through a lot of script to get to that warning,” Olson said. The IRS “also does not spell this out clearly on the portal — the language is technical and vague about who shouldn’t use the portal,” she said.

“Last-mile” taxpayers are the hardest to reach, Agostino said. “They don’t file returns. They don’t get Social Security. Their income is low enough to qualify for public housing,” which makes local housing directors a logical next step, he said.

Agostino noted that some of the IRS’s estimated 9 million nonfilers are eligible for the Supplemental Nutrition Assistance Program and for Medicaid.

“The outreach is that this is ‘free money,’” Agostino said. “Once you are in the system, we can help you get other benefits that you are entitled to get from the government.”

The "free money" approach doesn’t always work, Agostino said. Also, “I did not have the bandwidth with my volunteers to process all the calls,” he said. “The digital divide was a problem” between tax professionals’ electronic outreach and individuals without smartphones or stable mailing addresses, he said.

“Getting this information out [from the IRS] is good,” Olson said. “The real work will be done by the nonprofits and community-based organizations, including those [volunteer income tax assistance] sites that are up and running still.”

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