IRS Sends 8 Million Stimulus Payments by Prepaid Debit Card

(Bloomberg) -- The Internal Revenue Service is sending about 8 million of the $600 payments approved in recent stimulus legislation as prepaid debt cards.

The cards will go to some of the individuals who didn’t receive their stimulus payment by direct deposit in the past week. The IRS has already sent more than $100 billion of the roughly $164 billion of the second round of stimulus payments approved by Congress in late December.

“IRS and Treasury urge eligible people who don’t receive a direct deposit to watch their mail carefully during this period,” the agency said in a statement on Thursday.

“The prepaid debit card, called the Economic Impact Payment card, is sponsored by the Bureau of the Fiscal Service and is issued by Treasury’s financial agent, MetaBank, N.A.” the agency said. “The IRS does not determine who receives a prepaid debit card.”

Some people who received a $1,200 stimulus payment during the first round last spring in the form of a paper check may get a prepaid debit card this time, and vice versa, the IRS said. In the spring, some people threw away the mailed card not realizing that it was a legitimate payment.

The $600 payments were included in the $2.3 trillion combined government funding and coronavirus relief package. Direct payments are being made in a bid to bolster consumer spending and disposable income, which have fallen in recent weeks due to new restrictions by cities and states amid surges in Covid-19 cases, hospitalizations and deaths.

Individuals earning as much as $75,000 will receive $600; married couples collectively making less than $150,000 will get $1,200, plus an additional $600 for each dependent child. Those amounts are reduced by $5 for every $100 earned above the income threshold, which means that people earning more than $87,000 as an individual or $174,000 as a couple will get nothing.

If the Internal Revenue Service issues individuals more than they’re supposed to receive, they don’t have to pay back the excess amount. The government isn’t allowed to reclaim the payments to pay back federal or state debts, and banks are forbidden from garnishing them.

Individuals who don’t receive their full payment can claim the additional amount on the tax returns they file.