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Individuals Can File Simplified Return to Claim CARES Act Recovery Rebates

(Parker Tax Publishing April 2020)

The IRS is providing two 2019 tax return filing procedures for eligible individuals who voluntarily wish to file a federal income tax return only for the purpose of receiving the 2020 recovery rebates provided for in Code Sec. 6428 as a result of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The IRS said that, because it has not received returns for individuals eligible for these payments because such individuals might not be required to file, it currently lacks the necessary information to make the allowed payments in calendar year 2020 to such eligible individuals. Rev. Proc. 2020-28.


The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) added Code Sec. 6428, 2020 Recovery Rebates for Individuals, which provides an eligible individual a refundable tax credit against the individual's federal income tax liability for the first tax year beginning in 2020. In general, the amount of the payment equals the sum of (1) $1,200 ($2,400 in the case of two eligible individuals filing a joint return), plus (2) an amount equal to the product of $500 multiplied by the number of qualifying children (within the meaning of Code Sec. 24(c)) of the eligible individual.

The 2020 recovery rebate is reduced (but not below zero) by 5 percent of the amount by which the taxpayer's adjusted gross income exceeds (1) $150,000 in the case of a joint return, (2) $112,500 in the case of a head of household, and (3) $75,000 in the case of a taxpayer not described in (1) or (2). An eligible individual is any individual other than (1) any nonresident alien individual, (2) any individual with respect to whom a dependency deduction under Code Sec. 151 is allowable to another taxpayer for a tax year beginning in the calendar year in which the individual's tax year begins, and (3) an estate or trust.

For the purpose of determining the 2020 recovery rebate, a child must be under the age of 17 and have a social security number that is valid for employment or an adoption taxpayer identification number (ATIN). In general, Code Sec. 6428(f)(1) provides that each individual who was an eligible individual for tax year 2019 is treated as having made a payment against the federal income tax for 2019 in an amount equal to the 2020 recovery rebate amount. Code Sec. 6428(f)(2) provides that the 2020 recovery rebate is the amount that would have been allowed as a credit under Code Sec. 6428 for 2019 if Code Sec. 6428 (other than Code Sec. 6428(e) and Code Sec. 6428(f)) had applied to tax year 2019.

Code Sec. 6428(f)(5)(A) provides that, if an eligible individual has not filed a federal income tax return for 2019, the Treasury Secretary may determine the amount of the 2020 recovery rebate based on information reported on the eligible individual's federal income tax return filed for tax year 2018. If that eligible individual has not filed such a return for tax year 2018, Code Sec. 6428(f)(5)(B) provides that the Treasury Secretary may use information with respect to that eligible individual for calendar year 2019 provided in (1) Form SSA-1099, Social Security Benefit Statement, or (2) Form RRB-1099, Social Security Equivalent Benefit Statement. Code Sec. 6428(h) requires the Treasury Secretary to prescribe such guidance as may be necessary to carry out the purposes of Code Sec. 6428, which include the purpose set forth in Code Sec. 6428(f)(3)(A) of providing 2020 recovery rebates "as rapidly as possible."

2019 Tax Return Filing Procedures for Eligible Individuals

According to the IRS, because it has not received tax returns or forms described in Code Sec. 6428(f)(1) and Code Sec. 6428(f)(5) for individuals eligible for the 2020 recovery rebate, the IRS currently lacks necessary information to make the 2020 recovery rebate payments in calendar year 2020 to such eligible individuals. As a result, pursuant to Code Sec. 6428(h), the IRS issued Rev. Proc. 2020-28, which provides:

(1) a simplified federal income tax return filing procedure for eligible individuals who are not required to file a federal income tax return for tax year 2019; and

(2) a special procedure for eligible individuals who are not required to file a federal income tax return for tax year 2019 and have zero adjusted gross income (AGI) for 2019 to file a complete federal income tax return electronically.

The simplified procedure in (1), above is detailed in Section 3 of Rev. Proc. 2020-28. The special procedure in (2), above, is detailed in Section 4 of Rev. Proc. 2020-28 and accommodates zero AGI filers who need to provide more detail in filing state or local tax returns than that allowed by the simplified procedure or who utilize tax return preparation software that does not permit filing under the simplified procedure.

For a discussion of the 2020 recovery rebate, see Parker Tax ¶78,805.

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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