Stimulus payments being cut for some with government debts

[babylonsister]

Stimulus payments being cut for some with government debts
Congress allowed the reductions for people behind on taxes, student loan payments and other obligations
By AARON LORENZO
01/29/2021 02:14 PM EST


Millions of people who owe taxes and other money to the government are seeing their economic stimulus payments cut or wiped out to cover the debts because Congress peeled back a protection that had been in place for months.

The cuts may be particularly hitting those most in need of relief money because of the coronavirus pandemic, including veterans, Social Security recipients and students.

The problem has arisen because the IRS is redirecting stimulus payments for some people to settle unpaid federal and state taxes, Social Security and Veterans Affairs debts, student loan debt and child support obligations, according to the Taxpayer Advocate Service, an in-house IRS watchdog.

Congress had shielded previous payments from being rerouted for those types of things, except for unpaid child support, but moved the goalposts at the end of December, when it approved another round of stimulus payments of up to $600 per person.

Most of those payments went directly to households, through direct deposits or paper checks, and their money can’t be redirected.

But millions of others who didn’t get direct payments need to file tax returns this year and claim a recovery rebate credit, or RRC, to receive the stimulus money. Some 8 million households are in that boat, according to a recent Treasury Department estimate, and a good share of them might not get the credit because Congress directed the IRS to instead steer the money to cover various debts, National Taxpayer Advocate Erin Collins said.

more...

https://www.politico.com/news/2021/01/29/stimulus-payments-government-debts-463802

[jimfields33]

1. Perhaps sending a letter to those in that boat.

How awful would it be if they took the 600 dollars off their taxes only to find out later they owe it back with interest of course. Ugh.

[babylonsister]

2. A letter would be great, but they can't manage

to even send a lot of checks out, so I doubt this will happen.

[jimfields33]

3. Unfortunately you are 100 percent correct.

[Laelth]

4. Stupid, stupid policy.

The people who are deeply in debt are the people who probably need the stimulus money the most. They still have to pay their current bills.

-Laelth