IRS issues guidance on EIPs paid to deceased individuals

Ever since the CARES Act passed and credit unions learned their members would be receiving economic impact payments (EIPs), the NAFCU Compliance Team has been getting questions about handling these incoming ACH files and checks. One common question that has come up is whether deceased individuals are eligible for EIPs and what a credit union should do if it receives an EIPs payable to a deceased member. Yesterday afternoon, the IRS provided clarity on this issue.

In the updated EIP FAQs, the IRS explains in question 10 deceased individuals do not qualify for EIPs. The IRS did not provide a bright-line rule regarding the date of death of the individual and instead is relying on the date of payment. If the individual “died before receipt of the payment,” they are not eligible. The IRS further notes EIPs paid to deceased individuals “should be returned to the IRS by following the instructions about repayments.”

The repayment instructions are outlined in question 41. The instructions explain how an individual should return an EIP to the IRS based on where they live. For uncashed checks, the payee should void the check and return it to the IRS. For cashed checks and ACH transactions, the payee should mail a personal check to the IRS.

So, what does this guidance mean for your credit union? The IRS guidance does not place any requirements or obligations on credit unions regarding EIPs paid to deceased individuals. Instead, the guidance is addressed to the individual who received the EIP.


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