Thanks to the coronavirus relief bill that President Trump signed Friday, most Americans can expect to receive a nice cash payment from Washington to help cover their bills while waiting out this lovely springtime pandemic. Under the legislation, the government will send adults tax rebates worth up to $1,200, with an additional $500 for each of their children, though the amounts start phasing down and eventually drop to zero for higher earners.
Unfortunately, millions of low-wage workers who are legally entitled to a check might never see one. Or if they do, it could take months to reach them, by which time the country will already be deep into an economic crisis.
The reason why is that the government intends to track Americans down and deliver their corona-bonus using the tax information they submitted in 2018 or 2019. But a fairly large number of households don’t file returns to the IRS each year because their income is so small that they are not required to. As a result, they don’t have a current bank account or home address on file with the agency. If one of these non-filers happens to receive old age or disability benefits from Social Security, the government will send them their relief checks based on that info. But otherwise? They might be out of luck. The Institute on Taxation and Economic Policy estimates that some 7.5 million households, with 9 million adults and 4 million children, might not be able to get their money promptly, or perhaps at all.
As you might expect, the people who stand to miss out on help are the ones who could probably use it most. Non-filers generally earn less than the standard deduction, which is about $12,200 for an individual and $24,400 for a married couple. As Chuck Marr, senior director of tax policy at the Center on Budget and Policy Priorities, put it to me: “If you make 10,000 bucks a year, $1,200 is a lot of money.”
A straightforward way to fix this situation would be to convince more people to file their taxes for 2019. And, in fact, the rescue bill does instruct the Treasury secretary to conduct a public awareness campaign about the rebates. But getting people to claim their cash might be easier said than done. Many of the Americans who don’t file miss out on the Earned Income Tax Credit, the yearly bonus embedded in the tax code for working-class Americans. They’re generally a hard bunch for the government to reach. Now it will be even harder, given that the outbreak is keeping people away from tax-prep services and the filing deadline has been extended into July—so if they wait that long, they may not be reachable for months.
One reason for hope here is that the EITC only provides a small amount of money for singles. The coronavirus rebate, on the other hand, is pretty big, which might get people to H&R Block. The bill also permits the government to use other administrative information from other safety net programs, such Supplemental Security Income, to track down missing people. But they’re not required to, and it’s not clear how aggressive the Trump administration will really be. (They should also have W-2 wage statements on file that they could use to locate people, but again, that would take effort.)
Even people who do file taxes annually might have to wait a while to receive their money. When the Bush administration sent rebates to Americans as part of its 2008 stimulus package, it took nine weeks to physically print and mail checks. Thankfully, 82 percent of Americans who receive a tax refund receive it through direct deposit today and should get their cash quicker as a result. But that still leaves millions who could be left waiting months for their money to arrive in the mail.
All of this is symptomatic of the fundamental inefficiencies and glaring gaps in our tax and banking systems, which tend to victimize the poor. Finding people probably wouldn’t be so hard if we had a system where the IRS automatically prepared people’s tax returns and sent it to them for a quick sign-off, an idea that good-government types have pushed for years and which has been stymied by the tax-prep lobby. Getting people cash would be significantly easier if we offered Americans a free bank account through the Postal Service so that we didn’t have so many households cut off from the financial system. Instead, we have to run the printing presses and mail pieces of paper to families so that they can take them to a check-cashing service that will take a percentage cut. Giving money to people shouldn’t have to be this hard.
For more on the impact of the coronavirus, listen to this week’s episode of Slate Money.