Did the IRS Just Tell You That You Have to Return Your Stimulus Payments? | USTaxAid

Diane Kennedy's Blog

Did the IRS Just Tell You That You Have to Return Your Stimulus Payments?

Written by Diane Kennedy, CPA on September 10, 2021

The IRS has been sending out letters telling some taxpayers that they need to pay back their stimulus payments.

There will always be cases where an adjustment to the tax due/refund calculation is required because of a miscalculation or misreporting by the taxpayer.

That’s not what we’re talking about here.

In this case, what has happened is that taxpayers did not receive one or both of the 2020 economic stimulus payments. So, figuring the IRS incorrectly omitted the payment, the taxpayer innocently files for the payment as part of their tax return.

After all, that’s what we were told to do.

But the problem arises when the IRS thinks they DID pay the taxpayer the economic stimulus payment. The payment went to a prior address and someone else illegally cashed it or it was sent to the wrong direct deposit account.

No problem, the IRS says. Just tell us and we’ll fix it.

It’s just not that simple these days to get through to the IRS. You could call every day, a dozen times a day, and you’ll only ever even get through to the IRS a handful of times. And when you do, good luck finding someone with the authority to correct the problem.

A better solution if you find yourself in this situation is to file Form 3911 to initiate a trace on the payment made by the IRS. While you’re waiting, the IRS suggests that you pay the amount they are requesting.

Of course, that won’t be so easy for some taxpayers.

One other solution would be to have a tax professional call in for you using the tax professional hotline. However, you do need to have the Form 3911 filed first.

If you get a notice from the IRS, don’t panic. But don’t ignore it yet. If we can help, Contact Us.

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