It would certainly be no exaggeration to say that 2020 has been the most challenging year in recent memory. For seniors and those with disabilities, not only have their been concerns about a virus that was especially deadly to this group, but it has also been a financial struggle for many of them and a time of isolation and loneliness.
The virus and the shutdown that occurred because of it ended up leaving more than 20 million people being put into the unemployment category, social norms have been interrupted, citizens being forced to change nearly every aspect of their lives, and we cannot rule out the effects of politics when it comes to how this virus was addressed. But for the average American, the physical and financial toll has been tremendous, and for those who are older or have disabilities, the toll has been life-altering.
In late March, Congress stepped up, with the support of President Trump, and enacted the CARES Act. This act allocated funds to aid hospitals fight the coronavirus pandemic, enhance unemployment benefits, provide small business loans, and support distressed industries. But more importantly, it set aside $300 billion for direct stimulus payments to the public.
The feds promised quick relief, with individuals and couples scheduled to receive a maximum payout of $1,200 and $2,400, respectively. Although the checks came quickly for taxpayers, those receiving SSI or SSDI did not see payments until the end of May or the beginning of June.
For those on a limited income, spending extra money for things like hand sanitizer, masks, premium prices for toilet paper and paper towels, pushed their budgets to the limit. Many were forced to skip a payment on an electric or gas bill. Others who had no transportation to the supermarket because the city bus wasn’t running or only running for “emergency reasons” forced seniors to use higher-priced services like taxis or social transportation services – when they were available.
Confusion and Lack of Information
“We were able to help our clients who received daily money management services from us, and we had a daily list of stores that were open with the supplies many of them needed," said Attorney RJ Connelly III. “But what we did have problems with was answering questions about when the stimulus money would be arriving for them. Because we help our clients budget their finances, no one ran short, but many were concerned because they were in a position of not needing to file income taxes, but how their money would arrive was a mystery for several weeks."
When the end of May arrived, most of these clients finally starting seeing money show up in accounts managed by the law office. But then came the next concern, for those who did not receive a direct deposit, they began to wonder about receiving a check and concerned about theft. Then came a limited number of news stories about prepaid debit cards that were being sent out to some Americans who were not required to file a tax return. Again, a dearth of information that was short on details.
“This was another concern for us because we were unable to get any definitive information as to who would be receiving debit cards and why,” said Connelly. “After much investigation by our office, we found out that about 4 million Americans received their payments on these cards, which were issued by the Treasury Department’s financial agent, MetaBank. These cards went to those who did not have a direct deposit account on file with the IRS. Thankfully, all our clients finally received their payments through direct deposit or paper checks, and no one received these cards.”
And what was the problem with these cards? For the average person needing help budgeting, not a big deal, but for some who receive rep payee services, it could have been problematic.
"It's important to remember that when we or anyone who does rep payee work, this service is in place not only because the recipient may have difficulty managing money, but many have drug and alcohol addictions and by tracking and limiting access to money, it helps keep them safe and sober, or if we see the client spending money in liquor stores or money being spent in an unusual manner, we can intervene and contact their treatment providers if this is a part of the plan," said Connelly.
Of course, we shouldn’t be too hard on the Treasury Department because using these cards was a way to avoid the theft of checks, an admirable and well thought out plan. But, as they say, the best-laid plans of mice and men oft times...well, you know the rest.
“The Treasury was certainly thinking ahead with good intent,” said Connelly. “But, we spend a lot of time educating our clients about scams and unsolicited credit card offers that arrive in their mailboxes, offering a high credit limit and in the fine print, disclosing an exorbitant interest rate. Unfortunately, this plan by the Treasury wasn’t widely publicized, there we had concerns that seniors who heeded this information may have accidentally discarded these cards thinking they were credit card offers.”
As we indicated earlier, this did not apply to any of the clients of Connelly Law’s daily money management services, but there continue to be concerns from senior communities that it did happen to others as the cards came in plain envelopes from “Money Network Cardholder Services” and could easily be mistaken as a credit card offer at first glance.
And how would someone know if they accidentally threw the card away? Everyone who received their stimulus check also got a letter confirming the delivery of the money. If you received a letter but did not receive any deposit, check, or card, it's important to contact the government. “If someone thinks that they may have thrown this card away or had a check stolen, they can call 1-800-240-8100 to request a replacement. When prompted, press Option 2 to report the missing card or check,” said Connelly.
A Second Stimulus
So now, what about the second stimulus that is being discussed? Lawmakers certainly have an incentive to act quickly for a variety of reasons and the initial stimulus payouts simply didn't do enough for tens of millions of people, as the economic recovery hasn't supported a quick decline in the unemployment rate and there continues to be political infighting about the full opening of the economy.
And yes, politics is also involved here yet again as it is an election year. Passing another round of stimulus would be a major talking point for lawmakers on the campaign trail on all sides of the aisle. If this does move forward, what does the timeline look like?
Attorney Connelly points out that there are some pressing needs that will require quick action. “The enhanced unemployment benefits portion of the CARES Act is scheduled to end on July 31, that’s just over two weeks away. Without an extension, there could be defaults on mortgages, rental properties, car loans, and disruptions in electric and gas services. So if something is going to occur, it will need to happen very quickly.”
We can probably narrow this down even further. It appears this round of economic stimulus will originate in the Senate and the Senators are due back from their two-week vacation on July 20. So expect some form of stimulus action to move forward at that time. There is plenty of buzz around Washington that although Congress has been on vacation, work has been going on behind the scenes on the second package of financial relief.
“What we are hearing is that the unemployment monies will be the major focus,” said Connelly. “The HEROES Act, passed by the Democrat-controlled House calls for an extension of enhanced unemployment through January 2021. But the argument against this is that a $600 a week payment for the rest of the year is a disincentive to return to work resulting in a sluggish economy, an argument that does have some merit. So we will watch to see how this shakes out.”
And what about another round of stimulus checks? There are a number of ideas being floated about who would be eligible to receive another payment. These proposals range from no more payments being released to a monthly payment of $2000 for six months to those who qualify.
“The one that is being given serious consideration and supported by many in the Senate is a payment only to those who earn under $40,000 annually,” stated Connelly. “So this would include those getting SSI, SSDI, and most of those receiving social security retirement income. But we will know more in a few weeks and keep our clients updated as to the progress of another stimulus package.”
It also appears that if such a plan is in place, payments will arrive much quicker as the Treasury has worked out most of the kinks in delivering the money. But, there is one more important date coming up this Wednesday, July 15 – the IRS tax filing deadline and a return to other IRS collection proceedings.
Tax Returns Are Due Wednesday
As most of us who file taxes are well aware, the deadline for filing the return was postponed from April 15 to July 15. And to be clear, the IRS has made it known that there will be no additional extension to file. However, taxpayers can request an extension until October 15, but they still must submit a payment if money is owed by this Wednesday.
"July 15th also marks an end to the moratorium for delinquent taxpayers who were on installment agreements with the IRS," said Attorney Connelly. "The IRS has indicated that these payment arrangements will resume on the first due date after July 15th and taxpayers who paused their payments through a debit card are responsible for contacting their financial institution and restarting the installments."
"But there is some good news in this," Connelly continued, "taxpayers who are still struggling in meeting these payments can request that the payment amount be reduced to a more affordable amount."
To do this, log into the online payment agreement tool at IRS.gov/paymentplan and look for the "apply/revise" link to make changes to the payment amount or change the monthly due date. There will be a minimum amount, however, and if your proposed payment doesn't meet that requirement, you will be prompted to revise the request.
If you need assistance, call the number listed on the tax bill you received, however, be aware that you could be on hold for a long time before speaking with a customer representative. The IRS is putting more people on the telephones, but after being shut down for more than three months because of the virus, a lot of people will probably need help leading to increased waiting times.
So what if you filed months ago requesting a refund for an overpayment and have still not received it? Well, according to the IRS, they are running at least eleven percent behind in processing these claims.
But Attorney Connelly says there is a bright side to this. "If you're waiting for a refund, the IRS will be paying interest on 2019 refunds issued after April 15, at a rate better than a bank offers. The interest rate for the second quarter, ending on June 30, is 5 percent, compounded daily. After this date, the interest rate for the third quarter, ending Sept. 30, will drop to 3 percent."
"But, as with most government agencies, if it's good news, it comes with an asterisk," laughed Connelly. "The IRS states that the interest payments may be received separately from the refund. So don't be surprised if you receive a thirty cent check that cost fifty cents to mail."
We will continue to keep our clients and readers of this blog updated on the progress of additional stimulus action by the Congress.