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IRS issues updated guidance on EIPs
This week the IRS issued an updated statement regarding economic impact payments (EIPs) specifically concerning taxpayers who didn't receive the second EIP due to temporary bank accounts identified in their records labeled as closed; this includes individuals who used tax preparer services for their 2019 taxes.
The IRS indicated it will reissue payments to these individuals and that the reissued payments will be issued directly from the government later this month and may be issued as a paper check or as a direct deposit. The IRS also noted taxpayers do not need to take any action; the payments will be issued automatically.
The Treasury Department and IRS in December began delivering a second round of EIPs to eligible individuals as a part of the Phase 4 coronavirus relief and funding omnibus package.
Ahead of the new round of EIPs, NAFCU and industry trade groups continued to ask for additional clarity regarding processing electronic and paper check transactions to ensure credit unions and other financial institutions have the resources and guidance needed to efficiently get funds to consumers.
A NAFCU Compliance Blog from earlier this year outlined some considerations for credit unions processing EIP checks to help address potential issues. Credit unions should be aware that the Phase 4 legislation now clarifies that EIP funds are protected from garnishment, offset or levy. Treasury has addressed how protected payments should be handled in the following FAQs.
NAFCU will continue to share how credit unions' operations are affected by processing EIPs and seek additional guidance and improvements.