The Internal Revenue Service faces a challenge in meeting Treasury Secretary Steven Mnuchin’s three-week goal for sending out the recovery payments included in the $2.3 trillion coronavirus relief bill passed Friday.
“Our expectation is within three weeks, we will have direct payments out where we have depository information,” Mnuchin said while briefing the press Wednesday evening.
That task could be easier said than done, according to Janet Holzblatt, a senior fellow at the Urban-Brookings Tax Policy Center who was a former deputy director of the Individual Taxation Division in the U.S. Treasury Office of Tax Analysis.
“It’s difficult for me to accept that these direct deposits could actually be made in three weeks,” she told the Washington Examiner.
In her role at Treasury, Holzblatt worked with the IRS in 2001 and 2003 to send stimulus/rebate checks to taxpayers to help boost the economy. She said that, in both cases, the IRS started preparing for the payments months before their respective bills were enacted.
In 2001, the IRS began work on the payments in March, and that the bill was enacted in June of that year. It took six weeks after enactment for checks to be sent to recipients.
In 2003, there was a smaller group of beneficiaries receiving payments since it was an advanced payment to taxpayers who claimed the Child Tax Credit. The IRS began planning for these payments in January 2003. The bill was enacted in May, and payments did not start to go out until July of that year.
“My hope is that in anticipation of enactment of the act that IRS began its work,” Holzblatt said.
Holzblatt expects roughly 150 million people will receive a payment, and for those without direct deposit, it could take “several months” before their check arrives in the mail.
Mnuchin recently said that preparations have already begun at the IRS in getting the payments out. The IRS did not respond to an inquiry.
The $2.3 trillion relief bill provides all U.S. residents with incomes below $75,000 ($150,000 for married couples) a $1,200 payment ($2,400 for couples) as long as they have a work-eligible Social Security number and are not a dependent on another’s tax return. The payments are expected to cost the federal government nearly $300 billion, according to the Joint Committee on Taxation, which tallies the price of tax bills in Congress.
In a March 25 article, Holzblatt explained that a lot of work must take place to ensure the payments go to the right person.
“Computer programs must be developed and tested. Guidance must be drafted to fill in the holes left in legislation. Notices telling taxpayers when to expect checks must be written. The IRS website must be updated and telephone operators must be trained to deal with the expected deluge of questions from impatient taxpayers,” she wrote.
“There was a lot of planning and a lot of work that had to get done before we even reached the stage of getting those paychecks out,” she said.
Despite her skepticism, she noted that the increase in IRS direct payments should help get payments out.
“Among the people who get refunds, 80% have direct deposit,” she said. “So putting money directly into their bank accounts … that will help speed the process.”
