Round 2: Economic Impact Payments

On December 29, 2020, the Internal Revenue Service and the Treasury Department began delivering the second round of Economic Impact Payments (EIP 2) as part of the newly enacted Coronavirus Response and Relief Supplemental Appropriations Act of 2021.  This second round of payments is generally $600 for singles and $1,200 for married couples filing a joint return.  Those with qualifying children will already receive $600 for each qualifying child.  Just like the prior round, payments are automatic for eligible taxpayers who filed a 2019 tax return, those who receive Social Security retirement, survivor, or disability benefits (SSDI), Railroad Retirement benefits, as well as Supplemental Security Income (SSI) and Veterans Affairs beneficiaries who did not file tax returns.  Additionally, joint returns of couples where only one member of the couple has a Social Security number can now be eligible for a payment (work-eligible SSNs).  Incarcerated individuals are also likely eligible for the EIP 2. 

The IRS has made it clear that no action is required by eligible individuals to receive the EIP 2.  People can check the status of both their first and second payments by using the Get My Payment tool on Again, like the prior round, most recipients will receive these payments via direct deposit ACH deposits, paper checks as well as debit cards.  The EIP 2 payment card is sponsored by the Treasury Department’s Bureau of the Fiscal Service and issued by its financial agent, MetaBank, N.A.  The Treasury Check Verification Application (TCVA) is available to financial institutions as well to assist in the prevention of fraud. That can be found here: TCVA and U.S. Treasury Check Security Features

C/A has put together the Top 5 questions regarding EIP 2:

  1. Offset/Right of Set-Off—The EIP 2 are not subject to offset through the Treasury Offset Program. If financial institutions are considering this, it is best to consult with counsel prior to exercising a right of set-off. Reference: EIP Operational FAQs for Financial Institutions 4.1
  2. Garnishment—The EIP 2 are exempt from garnishment and do not support bank garnishment or levy by private creditors or debt collectors. EIP 2s are treated in the same manner as Federal benefit payments that are also exempt from garnishment. Reference: EIP Operational FAQs for Financial Institutions 4.2
  3. Closed or Inactive Accounts—If an account is closed or no longer active, by law, the financial institution must return the payment to the Treasury using the normal processes for returning payments sent to closed accounts. Reference: EIP Operational FAQs for Financial Institutions 2.2
  4. Overdraft Fees—At this time, it remains unclear whether financial institutions are allowed to take out overdraft or other fees with the EIP 2. Some of the larger institutions (JPMorgan, Bank of America, Wells Fargo) are granting overdraft relief as EIP 2 comes in, pausing collection on negative balances or offering temporary credits to customers who have overdrawn accounts. Other institutions are not considering zeroing out accounts or are looking at it from a case-by-case basis. 
  5. Deceased Recipient—Unless the account is closed, the bank should generally post the funds in accordance with the payment instructions. EIP recipients are responsible for returning to the IRS a payment made to someone who may not be eligible. Reference: EIP Operational FAQs for Financial Institutions 2.6

This continues to raise a lot of questions for financial institutions, both from a processing and collections standpoint, as well as trying to assist your customers during these difficult times. The Fed has released their AskTheFed Webinar addressing these concerns, and as always C/A’s Hotline is standing by to assist.