Senior Director of Federal Tax Policy
The Secretary of the Treasury and IRS Commissioner should make a clear public statement that seniors and people with disabilities who receive Social Security won’t have to file a tax return to receive their stimulus rebate.
An IRS newsletter released March 30 suggests that Social Security recipients who do not otherwise need to file a tax return may be required to file a return in order to receive the payment. Requiring seniors and people with disabilities who receive Form SSA-1099 (the annual Social Security benefit statement) to file a tax return is unnecessary. The federal government already has all of the information it needs to provide these payments without a tax return, and the Coronavirus Aid, Relief, and Economic Security (CARES) Act provides Treasury with the necessary legal authority to do so.
The drafters of the CARES Act were clearly trying to correct the mistakes of the 2008 stimulus payments. Lawmakers that year required roughly 15 million Social Security beneficiaries and veterans to file tax returns to get their stimulus payments, even though they had no other need to file a return and the federal government already had the necessary information to send them payments directly. The filing requirement created confusion and burdens for millions of people. Ultimately, about 3.5 million of these eligible people did not file and hence failed to receive payments intended for them.
The drafters of the CARES Act recognized that mistake and drafted the CARES Act stimulus payments to give Treasury the authority to provide payments automatically to Social Security beneficiaries and many others who don’t file tax returns. The Treasury and IRS should aggressively use that authority. Likely more than 15 million Social Security recipients who currently don’t file tax returns and aren’t otherwise required to do so would have to file, if Treasury doesn’t use its authority to get those people payments automatically.
The nation is in the middle of a pandemic and an economic crisis. Many senior citizens and people with disabilities will face obstacles to filing a tax return now. Social distancing means they will not have easy access to assistance in filing a tax return from government agencies, nonprofits, or for-profit preparers, and online and phone assistance will be ineffective for many — especially those who aren’t computer literate or lack computer or Internet access. Even family members now will often be unable to provide face-to-face assistance. Forcing Social Security beneficiaries to file an unnecessary return will mean some will be unable to do so, and others will face real stress and anxiety in trying to meet the requirement.
Experts agree that payments can be provided automatically. The Treasury and IRS can match Form SSA-1099 information with tax-return information to make sure that the beneficiary isn’t part of a tax filing unit that received a stimulus payment based on a tax return. Treasury also can use the Social Security Administration (SSA) data to deliver a stimulus payment using the same payment information as the recipient’s Social Security benefits.
Jack Smalligan, a former senior career official at the Office of Management and Budget who was involved in implementing the 2008 stimulus legislation, called the 2008 requirement for non-filers to file a tax return “an unnecessary delay and burden on seniors and veterans who do not have to file tax returns and an added administrative cost for IRS.” Referring to the CARES Act stimulus payments, Smalligan has explained that “SSA and VA have the administrative records for these individuals and the law allows these agencies to share the information with IRS. We should leverage existing federal administrative data rather than imposing new burdens on families.”