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Credit: US Dept. of Treasury

Second stimulus check: Millions facing delays for $600 checks

The IRS has started delivering the second round of stimulus checks into millions of bank accounts, providing $600 for each eligible adult and child. But as many as 13 million people may experience a delay in receiving their money after the IRS sent the funds to closed or invalid bank accounts, according to tax-prep company Jackson Hewitt.

Some people who don’t receive their checks may need to wait to file their 2020 taxes, when they can claim the stimulus payment as a tax rebate, the IRS said. That could mean at least several more weeks of waiting for their stimulus checks, which would be sent via tax refunds. The IRS typically begins accepting tax returns for the prior calendar year at the end of January and starts processing them in February.

The latest glitch in delivering millions of stimulus checks may complicate the recovery effort from the coronavirus pandemic, which has caused 8 million Americans to slip into poverty. In some cases, the IRS sent checks to temporary accounts created by tax-prep services such as H&R Block, TurboTax and Jackson Hewitt, which are typically used for the depositing of tax refunds. But those accounts, set up for last year’s refunds, aren’t currently valid, leading to delays in delivering the money.

In other cases, people may have closed the accounts they used last year when the IRS distributed the first round of stimulus checks. The tax agency said it is relying on the same bank information that it used to deliver the $1,200 checks in the first round of payments last spring and isn’t able to update bank information for the current round of $600 checks.

“Unfortunately, the IRS has confirmed that certain processing issues on their end will cause payment delays to many Americans waiting to receive the relief they’re eligible for,” Mark Steber, the chief tax information officer at Jackson Hewitt said in a company blog post. “It is estimated that the IRS has inadvertently sent payments to over 13 million bank accounts that are no longer open or valid.”

H&R Block said on Tuesday it was already receiving a high number of calls and emails from customers. “The IRS determines where second stimulus payments were sent, and in some cases, money was sent to a different account than the first stimulus payment last spring,” the company said on Twitter.

The IRS and Treasury didn’t immediately return a request for comment.

Payments needed

Even with previous stimulus aid, millions of Americans are struggling with higher rates of hardship, from trouble paying their bills to food insecurity, after the coronavirus pandemic upended the economy and cost millions of people their livelihoods.

A majority of Americans say they plan to use the $600 checks as soon as they receive them, according to a new survey from Doxo. The bill payment service found that almost 6 in 10 people will use the stimulus funds for household bills, while another 2 in 10 will use the money either to feed their family or pay off credit card bills. Only about 1 in 10 will sock away the money, Doxo reported.

The stimulus money won’t last long for many households, Doxo predicted, noting that the typical mortgage in America costs homeowners more than $1,200 a month, while renters pay an average of more than $1,000 a month.

No $600 check? 

People should visit the “Get My Payment” site at the IRS website to determine how and when their checks were sent to them. The site should inform people of a direct deposit date and provide account data, which is where their checks were sent.

However, some people are reporting they don’t recognize the account number, which could well be due to the use of a temporary account set up by their tax-prep companies last year.

The Get My Payment site will also let people know if their checks were mailed, which could take between three to four weeks to reach their recipients, the IRS said.

The IRS says stimulus checks sent to accounts that were closed or are no longer active must by law be returned to the tax agency. In other words: The financial institutions can’t hold and reissue the payments to their customers.

In that situation, people will need to wait for their 2020 tax refunds, this winter and spring, to receive their second stimulus checks, the IRS added. Taxpayers facing that possibility should file for their tax refund as quickly as possible via electronic filing and claim the check through the “Recovery Rebate Credit” on their 2020 tax returns. The money will be sent through their tax refund.

But the IRS hasn’t yet opened its systems for 2020 tax returns. Typically, the agency is ready for tax filing at the end of January and accepts tax returns through April 15. That means people who haven’t yet received a stimulus check are facing a wait of weeks or even months to get their payment.

Author: AIMEE PICCHI / CBS MONEYWATCH
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