- The Treasury Department said 8 million households haven’t received stimulus checks, despite being eligible.
- Those households may end up not receiving their entire stimulus checks if they owe back taxes.
- The issue could affect the latest round of $1,400 checks currently being debated in Congress.
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In January, the Treasury Department said as many as 8 million American households had not received stimulus checks despite being eligible under the law.
That included the $1,200 checks that were part of the CARES Act that passed in March 2020, as well as the $600 checks in the stimulus bill that passed in December.
The Internal Revenue Service has been sending out stimulus checks based on data from 2018 and 2019 tax returns. The estimated 8 million households not receiving checks are those whose information the IRS did not have on file, CNN reported, including people who did not file taxes in those years.
However, both the stimulus bills passed so far have said that people who owe back taxes are still eligible for direct payments. Now, the only way for them to get it is to claim the direct payments on their 2020 tax returns as a Recovery Rebate Credit, according to the Taxpayer Advocate Service, an independent government agency aimed at advocating on behalf of taxpayers.
But those Recovery Rebate Credits, the TAS explained, may be used by the IRS to pay off outstanding debts, like back taxes.
If you are eligible for a payment but did not receive your full Economic Impact Payment sent directly to you, "some or all of your unpaid stimulus payment will be withheld to offset those debts," the TAS said in a statement on its website.
"This approach - forcing eligible individuals to forgo receiving an EIP that was exempt from offset if paid timely - is a problem the law and the IRS have created," it continued.
That means some people may not receive the full direct payment they are entitled to.
The Treasury Department said the IRS established online tools last year for people to provide their information in order to receive direct stimulus checks. However, the Taxpayer Advocate Service said the IRS also told people they could claim the payments on their returns, without people knowing that could mean receiving a smaller payment.
Many of the people who are missing out on payments are "very low-income Americans who don't normally file taxes," as well as some people who moved or changed bank accounts, CNN reported.
"Financially struggling taxpayers who were entitled to receive the full amount of the EIP last year but did not have effectively been harmed once," the TAS said on its website. "It is unfair to harm some of these taxpayers a second time by seizing some, or all, of their stimulus payments."
A spokesman for the Taxpayer Advocate Service told CNN the agency is considering what can be done to address the issue.
A third round of stimulus checks in the amount of $1,400 is still being debated in Congress but is closer to becoming reality after the Senate approved the $1.9 trillion stimulus package on Saturday. After the vote, President Joe Biden said Americans would start receiving this latest round of checks this month.
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