Treasury is needlessly requiring millions of veterans, seniors to file taxes to receive stimulus checks

The COVID-19 pandemic is requiring everyone to learn new skills and respond quickly to the unique challenges of this crisis. The Department of the Treasury and the Internal Revenue Service (IRS) initially appeared to be repeating past mistakes in their effort to deliver stimulus checks recently authorized by Congress in the CARES Act. They are learning but have not gone far enough.

On Monday, IRS  released guidance suggesting that everyone may be required to file a tax return to receive a stimulus check, including the millions of seniors, people with disabilities, and veterans who are not normally required to do so. We know that during the Great Recession in 2008, a similar requirement meant that about 3.4 million people missed out entirely on their economic recovery payments.

After sustained criticism, on Wednesday Treasury Secretary Mnuchin said Social Security beneficiaries would not need to file tax returns. That’s progress. Now Treasury needs to do the same for millions of very low-income seniors and people with disabilities who receive Supplemental Security Income benefits from the Social Security Administration (SSA) and veterans who receive benefits from the Department of Veterans Affairs (VA).

In crafting the CARES Act, Congress learned a lesson from 2008. Congress mandates the secretary of Treasury to deliver the stimulus rebates “as rapidly as possible.” For people who have not filed tax returns for 2018 or 2019, the act grants the Treasury explicit authority to use information on the Social Security benefit statement beneficiaries receive, and, importantly, Congress also included language authorizing the IRS to receive records from other agencies, including the SSA and VA, to facilitate payments to those who receive benefits from these agencies. This final provision, added in the last 48 hours of the negotiations, suggests Congress intended to send payments broadly to federal benefit recipients. 

Treasury should fully use existing administrative records kept by SSA and VA to get payments to veterans and low-income seniors and people with disabilities without requiring them to file an unnecessary tax return. 

We know that failing to use this data will prevent many from receiving critical assistance during this national crisis. In 2008, the Treasury asked Congress to include language that required roughly 20 million seniors, veterans and people with disabilities to file tax returns to get their stimulus payments even though they had no other need to file.

We now know that ultimately, about 3.4 million (17 percent) of those eligible people never filed (PDF) to receive their economic recovery payments. The Treasury could have conducted data matches with other agencies to reach all of those people. The IRS Taxpayer Advocate criticized the filing requirement in testimony before Congress (PDF).

Each month, the Social Security Administration (SSA) and the Department of Veterans Affairs (VA) send benefits to millions of Americans whose incomes are so low they do not need to file tax returns. By conducting a data match with these agencies, the Treasury could have quickly sent those people recovery funds and avoided any duplicate payments in 2008 and can do so now.

I was at the Office of Management and Budget when the 2008 stimulus legislation was enacted. At that time, the decision to require filing a tax return was a policy one, not one based on the federal government’s technical capacity to conduct data matches.

Federal agencies frequently share data to more efficiently administer programs, and they do so while protecting individuals’ privacy. Requiring everyone to file a tax return—especially during a public health emergency, when getting face-to-face help will likely be impossible—creates an unnecessary delay and burden on low-income seniors, people with disabilities, and veterans who do not usually have to file tax returns, and it adds an administrative cost for the IRS.

At a time like this, we should use all existing federal administrative data rather than impose new burdens on individuals and families. Delivering these critical payments as quickly as possible should be our top priority.

Jack Smalligan is a senior policy fellow in the Income and Benefits Policy Center at the Urban Institute.