IRS Changes Course, Extends Filing Deadline for Federal Benefit Recipients to Request $500 Pandemic Relief for Dependent Children

PHILADELPHIA, Aug. 19, 2020 – In response to a preliminary injunction motion filed by Berger Montague, Community Legal Services of Philadelphia, and the Villanova Federal Tax Clinic, the IRS has reopened its non-filer tool to allow hundreds of thousands of people who receive federal benefits to request $500 economic impact payments for their dependent children. The IRS announced this major policy reversal ahead of a preliminary injunction hearing scheduled for August 17, 2020.

With this policy change, federal benefit recipients who did not file a 2018 or 2019 tax return have until September 30, 2020 to use the IRS’s non-filer tool to apply for the supplemental $500 payment for their qualifying children. The IRS expects these payments to be distributed by mid-October 2020.

The preliminary injunction motion, filed in July 2020, alleges that the IRS and Treasury Department refused to issue economic impact payments (“EIPs”) in a timely manner to federal benefits recipients with eligible dependent children, as Congress directed in the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act.

In response to the unprecedented economic disruption wreaked by the COVID-19 pandemic, Congress authorized EIPs of up to $1,200 per adult and $500 per dependent child under age 17 to millions of American households via the CARES Act. The CARES Act uses the federal tax infrastructure to distribute the EIPs as quickly and efficiently as possible. However, this is not an effective method for distributing EIPs to “non-filers”: individuals who are not required to file tax returns, mostly due to having severe disabilities.

In April 2020, after considerable Congressional and public pressure, the IRS and Treasury Department announced that they would automatically send EIPs to non-filer adults who are “known” to the federal government because they are receiving Social Security retirement, Social Security disability, Railroad Retirement Board (“RRB”), Veteran Affairs (“VA”) or Supplemental Security Income (“SSI”) benefits. However, the IRS and Treasury Department later stated that they would not make automatic payments to eligible dependents of federal benefits recipients. Instead, the IRS and Treasury Department announced that non-filers who receive Social Security retirement, disability, and RRB benefits had less than 48 hours to add their dependents to their EIPs via a non-filer online portal. VA and SSI benefits recipients were provided ten days to use the non-filer portal. In sharp contrast to these tight deadlines, non-filers who do not receive federal benefits have until October 15, 2020, to access the same portal.

Unsurprisingly, many non-filer federal beneficiaries with dependents were unable to meet the very short deadlines set by the IRS and Treasury Department: many did not learn of the IRS announcements, some encountered technical issues with the portal, and others have disabilities that prevented them from using the portal without reasonable accommodations, which were not provided during the applicable window to add dependents.

The IRS’s new policy will help people receiving federal benefits who missed these brief windows claim their $500 payments online. This is welcome news for low-income families who desperately need these payments promised by the federal government.

“We are tremendously gratified that our team’s efforts convinced the IRS to change its policies to allow people like our clients to obtain the dependent benefit payments Congress intended for them to receive and that they so desperately need,” said Berger Montague Shareholder Ellen Noteware.

Berger Montague is a national plaintiffs’ class action and complex litigation law firm headquartered in Philadelphia with offices in Minneapolis, San Diego, and Washington, D.C. Berger Montague litigates complex civil cases and class actions in federal and state courts throughout the United States. In its 50 years of operation, the Firm has pioneered the use of class actions in America and recovered well over $36 billion for its clients and the class members it has represented.

Founded in 1966 by the Philadelphia Bar Association, Community Legal Services of Philadelphia (“CLS”) has provided free civil legal assistance to more than one million low-income Philadelphians. Approximately 10,000 clients were represented by CLS in the past year. CLS assists clients when they face the threat of losing their homes, incomes, healthcare, and even their families. CLS attorneys and other staff provide a full range of legal services, from individual representation to administrative advocacy to class action litigation, as well as community education and social work. CLS is nationally recognized as a model legal services program.

The Federal Tax Clinic at Villanova University’s Charles Widger School of Law melds Villanova Law’s dedication to public service with hands-on learning. For over 20 years, the Federal Tax Clinic has sought to protect taxpayer rights and ensure the fairness and integrity of the tax system by providing representation, education, and systemic advocacy for low-income individuals on federal tax matters.

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Ellen T. Noteware

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