The IRS plans to send electronic payments as soon as late next week to more than 115 million Americans as part of the $2 trillion coronavirus federal rescue package, a week sooner than expected, according to a plan circulated internally Wednesday.
However, $30 million in paper checks for millions of other Americans won’t start being sent out until April 24, because the government lacks their banking information. And some of those checks won’t reach people until September, the document shows, underscoring the reality that many Americans could have to wait five months to receive their checks.
The speed with which the money is disbursed will depend largely on people’s method of filing taxes. Electronic payments can be distributed quickly, whereas the IRS must print paper checks and mail them separately. About eight in 10 taxpayers have signed up for direct deposit payments for their past tax refunds, a number that has grown in recent years. Treasury Secretary Steven Mnuchin said on Thursday that these Americans would receive the money within two weeks.
An IRS spokesman couldn’t immediately be reached for comment.
The IRS plan would distribute paper checks to the lowest-income Americans first, prioritizing payments for individual taxpayers with incomes of $10,000 or less on April 24.
Checks for earners of $20,000 or less would be in the mail May 1, followed by those with incomes of $30,000 on May 8, $40,000 on May 15, and continuing in income increments of $10,000 each week, according to the plan. The IRS plans to issue about 5 million checks each week.
Rescue checks would be issued on Sept. 4 to joint taxpayers earning around $200,000, the maximum allowed under the rescue plan. All others would be sent on Sept. 11, in most cases because the IRS did not have prior tax information for them and they need to apply for the checks.
The tax agency is racing to set up payment systems as millions of Americans have been forced out of the labor force by the pandemic, with jobless claims soaring to a staggering 6.6 million last week.
The plan is to generate electronic checks on April 9, according to the payment schedule reviewed by The Washington Post. Depending on how quickly banks process the payments, they would be deposited by April 14 at the latest.
“If we know where to put the money, we’re going to press the button and put it there next week,” said an IRS official who spoke on the condition of anonymity because the official was not authorized to speak publicly.
American adults who earned less than $75,000 will receive a $1,200 payment, with children receiving $500. The payment will be phased out for Americans who receive more than that, and adults who earned more than $99,000 will not receive the benefit, under the law.
About 145 million Americans are eligible for rescue checks, depending on their income. Mnuchin had said he expected most Americans to get their payments by April 17. The IRS still has not said publicly how long it would take the agency to issue paper checks, or how it plans to decide who should get them first.
Another 64 million Americans receiving Social Security and disability income will also receive checks, many of them electronically, after the Treasury Department announced Wednesday that they can get payments even if they typically do not file a tax return.
Most taxpayers will not have to file a separate claim with the IRS to receive their checks. The new law directs the Treasury to look at Americans’ 2019 or 2018 tax returns to determine whether they are eligible for a payment.
The agency had strongly considered spacing payments out based on $25,000 income brackets, but it concluded in recent days that it needed to send the checks in smaller batches because its networks do not have the bandwidth to issue so many checks in one week, the IRS official said. A slower ramp seemed more manageable, the official said.