Q: Has the Treasury Department issued a new round of Economic Impact Payments?
A: Yes. On December 29, 2020 the Internal Revenue Service (IRS) and the Treasury Department began delivering a second round of Economic Impact Payments (EIP2) as part of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021. This round of payments includes direct deposit payments as well as paper checks. Discussed below are some similarities, and differences, between this round of payments and the first round.
The EIP2 payments are not subject to garnishments. This exemption will be indicated by an “XX” in their ACH identifier (XXTAXEIP2) and the check symbol. Furthermore, if the bank receives an EIP2 via ACH for an account that is closed, Treasury and IRS have instructed that the bank is to return the ACH as “account closed.” This is standard procedure pursuant to Chapter 4 of Treasury’s Green Book regarding the processing of electronic payments. Banks should also note that exceptions and returns should generally be processed as bank would normally, similar to the first round of payments.
Individuals alive on January 1, 2020 are eligible for EIP2 payments. If bank receives an EIP2 check payable to a deceased person, it should consider its typical procedures regarding checks payable to deceased individuals, including considerations as to existence of a proper endorsement. IRS has noted that it is conducting eligibility screening and will provide instructions for posting. Generally, as was the case with the first payments, it is the responsibility of the taxpayer to follow instructions as to when a payment is to be returned to IRS.
Banks have also begun asking questions related to offset. For an analysis of offset, WBA recommends bank consider working with its legal counsel.