Much has been written in these pages and elsewhere about the ins and outs of the CARES Recovery Act rebates, also known as stimulus payments or economic impact payments. We know these payments will not count as income in the calculation of a beneficiary’s SSI amount for the month in which it was received (26 U.S.C. § 6409) or be counted as “resources” for a twelve month period following the receipt of the funds (26 U.S.C. § 6409).
But can the Social Security Administration (SSA) seize the economic impact payments, which are considered refundable tax credits, to recover an overpayment? According to research done by Mike Telfer and Alison Zaloba of the Albany office of the Legal Aid Society of Northeastern New York, the answer is no.
An overpayment is the amount of benefits SSA paid to an individual that was more than the amount the individual should have received. POMS GN 02201.001(A); see also POMS SI 02201.005(A). SSA has a number of weapons in its arsenal to collect overpayments, including by offset of income tax refunds. SSA ordinarily cannot recover an overpayment from an individual’s tax refunds if the individual is currently receiving SSI or Social Security benefits. 26 U.S.C. § 6402(d)(3)(A); see also 31 U.S.C. § 3720A(f)(1); POMS SI 0220.012(A)(3); POMS GN 02201.030(A)(2). SSA can, however, recover an overpayment from a former recipient of Social Security or SSI benefits.
For former SSI recipients, 31 U.S.C. § 3720A permits SSA to recover delinquent SSI overpayments from former SSI recipients by offsetting the individual’s federal income tax refunds. POMS SI 0220.012(A)(2). But the CARES Act prevents SSA from recovering SSI overpayments from the stimulus payments. Even though the stimulus payments are issued by the Internal Revenue Service, the CARES Act specifically exempts the economic income payments from reduction or offset under 31 U.S.C. § 3720A. P.L. 116-136, Mar. 27, 2020, 134 Stat. 281, Sec. 2201(d)(1).
Under the Omnibus Budget Reconciliation Act of 1990, SSA can recover former recipients’ Social Security overpayments by offsetting federal income tax refunds. POMS GN 02201.030(A)(1). But the CARES Act also exempts economic impact payments from reduction or offset pursuant to 26 U.S.C. § 6402(d). P.L. 116-136, Mar. 27, 2020, 134 Stat. 281, Sec. 2201(d)(2).
Therefore, the payments under the CARES Act cannot be used to recover overpayments from current or former recipients of SSI and Social Security benefits. For more information on protecting stimulus payments from other creditors, see this FACT Sheet from the National Consumer Law Center. And thanks to Mike and Alison for their helpful research.