Senior Director of Federal Tax Policy
April 3, 2020: We’ve updated this post.
It’s welcome news that Treasury and the IRS will use the authority that Congress gave them to automatically provide stimulus payments to Social Security and railroad retirement beneficiaries who do not usually file a tax return, instead of making them file one. It’s imperative that they do the same for some 3 million very low-income seniors and people with disabilities who receive Supplemental Security Income (SSI), as well as more than 200,000 low-income recipients of certain veterans pension and disability benefits, many of whom could face real difficulties filing a return and therefore could miss out on crucial stimulus payments.
Recipients of SSI and Veterans Affairs (VA) pension and disability benefits who don’t file returns and don’t receive Social Security retirement or disability benefits aren’t covered by Treasury’s decision yesterday to provide payments automatically to Social Security beneficiaries who don’t file. Filing a tax return would be difficult for many SSI recipients and veterans’ pension and disability recipients even during normal times. They include very low-income seniors and people with disabilities, some of whom have cognitive disabilities and other challenges that make it difficult to complete the required tax forms without assistance, and veterans with disabilities who similarly can face challenges with red tape. But requiring these individuals to file a return during this pandemic is particularly unreasonable and dangerous.
Given stay-at-home orders and the public health imperative for all of us — but particularly those who are older or have health conditions — to assiduously avoid face-to-face contact with family, friends, and public and private entities, SSI and VA pension and disability beneficiaries will be forced to rely on phone and the internet for any help with the forms. But many don’t have internet access or capacity to understand the forms on their own, and telephone-based help may be unavailable or ineffective for many. Many may not know they need to file to get their payments or may not be able to overcome that barrier, as happened with millions of intended beneficiaries of stimulus payments in 2008.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides the legal authority for Treasury to provide payments to these groups automatically and mandates quick action: “The Secretary shall, subject to the provisions of this title, refund or credit any overpayment attributable to this section as rapidly as possible” (emphasis ours). Within this legal mandate, the law allows Treasury to electronically deliver rebates to payees who receive tax refunds or a “Federal payment,” including federal benefits like SSI and VA pensions and disability benefits. This authority is similar to how the CARES Act enables Treasury to send payments directly to tax filers who filed a return for 2018 but not yet for 2019, and to how it authorizes Treasury to send payments directly to recipients of Social Security and railroad retirement benefits who have not filed a tax return.
Practically speaking, Treasury has access to the information it needs to issue the payments to these non-filers. As former senior Office of Management and Budget official Jack Smalligan has pointed out, Treasury can match its data against those from the Social Security Administration and Veterans Affairs to determine which SSI and veterans’ beneficiaries aren’t part of a tax filing unit (that is, they don’t already file tax returns and aren’t claimed as someone else’s dependent) and then issue them automatic payments. This is effectively the process that Treasury has already decided to use for non-filers among Social Security and railroad retirement beneficiaries.
The leadership and professionals at Treasury and IRS should be commended for doing all they can to prevent millions of Social Security beneficiaries from having to file a tax return unnecessarily during a pandemic. That same commitment is needed for recipients of SSI and VA pensions and disability benefits. Picture a young adult with Down syndrome, or an elderly woman who never made enough to qualify for Social Security, or a low-income disabled veteran who served their country but hasn’t filed a tax return in years. There are millions like them around the country.
These are important members of our communities living with additional burdens in this pandemic. There’s no reason to add to that burden by making them navigate filing a tax return when their government has all it needs to deposit a rebate in their bank account.