The Internal Revenue Service announced this week that it is getting ready to send out nearly 4 million refunds for unemployment compensation overpayments. Those refunds will go out to taxpayers “who overpaid their taxes on unemployment compensation received last year.”
Why the refunds? It has to do with provisions of the American Rescue Plan Act.
“The American Rescue Plan Act of 2021, which became law in March, excluded up to $10,200 in 2020 unemployment compensation from taxable income calculations,” the IRS said. “The exclusion applied to individuals and married couples whose modified adjusted gross income was less than $150,000.”
The payments will begin going out on July 14, which is this Wednesday; it’s the same day that the government will send out the first payments as part of the expanded child tax credit, also brought into being by the American Rescue Plan.
“To ease the burden on taxpayers, the IRS has been reviewing the Forms 1040 and 1040SR that were filed prior to the law’s enactment to identify those people who are due an adjustment. For taxpayers who overpaid, the IRS will either refund the overpayment, apply it to other outstanding taxes or other federal or state debts owed,” the IRS said.
“For this round, the IRS identified approximately 4.6 million taxpayers who may be due an adjustment. Of that number, approximately 4 million taxpayers are expected to receive a refund. The refund average is $1,265, which means some will receive more and some will receive less.”
Last month, a report by Axios found that as much as half of the unemployment money sent out by the government may have been stolen, with much of its supposedly ending up in the hands of international crime syndicates. The story put the total of stolen money as high as $400 billion.
However, the veracity of that report has very much been questioned, since the only sources for it were a pair of companies that are dedicated to selling anti-fraud software to the government.
“This is all inference and conjecture,” communications advisor Dan Lavoie wrote on Twitter about a follow-up to the Axios story. “If hundreds of billions of dollars were being stolen (rather than perhaps merely some shady applications) we should be able to find countless real-world examples. You have two (Tupac & Feinstein)….and one of them isn’t fraud.”
“The result of promoting this narrative will not be ‘let’s fix the fraud problem and make sure the money gets to the right people,’” Discourse Blog wrote of the report.
“It will be that Congress decides that it’s unwise to pump a massive influx of money into state unemployment coffers during a crisis, and that the next time we deal with something like this, we shouldn’t do that and instead make people jump through a million (or 400 billion) hoops to get their money.”
Stephen Silver, a technology writer for The National Interest, is a journalist, essayist and film critic, who is also a contributor to The Philadelphia Inquirer, Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.