I'm sorry, but you are wrong on both counts. You either didn't read the text (which is what I suspect) or didn't understand it if you did. The stimulus payment is provided for by adding a new section to the tax code, IRC Section 6428. Subsections (a) and (b) are what tell you this is a tax credit and thus a tax refund:
I'm not asking you to rely on my "self proclaimed superior knowledge." I'm simply asking that you have actually looked at the law in question before telling me I'm wrong, especially here where it's in an area I know and I already told you that I had read the actual text of the bill. Given that, I would have thought you'd think "gee, if he's read it and saying something different than I'm saying, maybe I ought to read it before jumping in and saying he's wrong." Or at least cite some other authoritative source for your position. Is that really too much to ask? It's frustrating to be told repeatedly in a thread that I'm wrong when I'm explaining things with actual citations and quotes from the bill and offered to provide more if needed. I then have to keep coming back to correct the wrong assertions. Members here have jumped on another member for posting wrong things about the law that they later have to correct because they get frustrated having to do that. So I hope you understand my frustration. It's not my intent to lord over you my expertise in this area, as you seem to imply. If it came across that way, that's not what I was going for. What I am going for is you giving me some benefit of the doubt when I've read the actual law and you have not yet done so. I realize from your statements that you were relying on some unidentified reports you've seen/heard/read about the bill, but not knowing what those are I cannot address them. I did say earlier that the general media gets this kind of stuff wrong a lot. They leave out important details or misunderstand what they've learned about the law from the experts they consult. So please bear that in mind when you rely on reports in newspapers, TV news accounts, etc. There is no substitute for reading the actual law involved.Although I had to correct your misunderstanding of the original Senate Bill, I will cede to your self-proclaimed superior knowledge here.
Quincy, the tax code allows for a number of "refundable" tax credits. Refundable tax credits are defined as tax credits that someone receives even if they have no tax to credit them against.You made a few assumptions there, Taxing.
If anyone wants to read the final text of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, it is linked to in my previous post. You can see what it says about the relief checks on page 144 et seq, section 2201.2020 Recovery Rebates for Individuals.
There is a difference in the meanings of the words “rebate” and “refund” and “credit.”
I read it as it appeared to me. While you know what you meant, what you wrote may not have come across as you intended.You made a few assumptions there, Taxing.
But I do apologize for the tone in which I described my frustration. I clearly could have done better in explaining to you why the way your responses played out bothered me. There is. And I described the stimulus payment correctly. The stimulus payment is defined in the Act as a refundable credit. See my post #17 which lays that out. And moreover, it is an advance credit that is being refunded now rather than waiting for you to file your return next year to claim it. This is clearly stated in IRC § 6428(f)(3)(A) (which is located on page 147 of the file you linked, starting at line 11, which states: "The Secretary shall, subject to the provisions of this title, refund or credit any overpayment attributable to this section as rapidly as possible. No refund or credit shall be made or allowed under this subsection after December 31, 2020."
Ok, let's start with that. You are correct that refunds are distinct from credits, but they are related. And maybe that's where the problem here lies. As you noted, these stimulus amounts are tax credits. In the tax code there are two kinds of credits, refundable credits and nonrefundable credits. Nonrefundable credits only offset tax you owe. If the tax you owe is less than the credit, the excess credit is lost and doesn't do you any good unless there is a provision allowing you to carry it forward or carry it back to another tax year. Refundable credits, however, do result in a refund to the taxpayer when the credit exceeds the tax owed.
Well, no. As it relates to income tax, the Code uses the word "rebate" the in the context of determining a deficiency in tax. The term "rebate" is specifically defined for that purpose and that definition would not fit what the Congress is doing with the stimulus payments. Moreover, the definition makes it clear that the term "rebate" is different from a credit. It is also different than what most people think of as a "rebate" (e.g. store rebate, etc). There is nothing in the Code that provides for a rebate payment. It provides for payments of refunds (see IRC $ 6402), which is why Congress repeatedly used the word refund in the text.
You and I see this a bit differently but I don't see any purpose in hashing that out to determine (if we even could) what fault lies where. I apologized for my part in it. I was frustrated by your responses to me and have admitted I should have done a much better job in explaining the reason for that frustration. I did not mean to be rude or insulting to you. Nor do I think you intended to be rude or insulting to me. I was hopeful that, at the very least, you'd acknowledge and accept that apology. But your response above suggests to me you aren't willing to accept my olive branch. So what is it that you are looking for?
You edited your post while I was composing mine to read as above. I now see you have a concept for these terms that underlies your reasoning. You are correct that tax refunds are the results of overpayments. This Act provides each eligible individual with a credit of $1,200 ($2,400 for joint filers) toward their 2020 taxes. In the language of the Act: "In the case of an eligible individual, there shall be allowed as a credit against the tax imposed by subtitle A for the first taxable year beginning in 2020...." IRC § 6428 (a)(1). And it goes on to provide that the credit is refundable. This makes it like the earned income credit (EIC) and also like tax payments made (withholding from wages, estimated tax payments, etc) in that if the total of all your refundable credits and tax payments exceeds your tax for the year, it results in an overpayment. Indeed, the Act specifically says "each individual who was an eligible individual for such individual’s first taxable year beginning in 2019 shall be treated as having made a payment against the tax imposed by chapter 1 for such taxable year in an amount equal to the advance refund amount for such taxable year." IRC 6428(f)(1)(underlining added). So you can see, it is treating this exactly like a payment made towards your 2020 tax liability. The bill then directs Treasury to "refund or credit any overpayment attributable to this section as rapidly as possible."
Ok, I see. Interesting.
You obviously like to write about taxes.
The bank will freeze the account up to the amount on the levy/garnishment when the order is received and after that Norm would get notice of it. However, the bank won't remit the money to the creditor until the time provided in the statute to challenge the levy/garnishment is over. So the funds won't go anywhere — he won't be able to access them but they won't go to the creditor either — until any challenge is resolved. The exception is that if the bank can determine on its own that the account contains only Social Security or can determine what portion is Social Security it may not freeze those funds. It is for this reason that I suggest clients have their Social Security put into an account where only Social Security funds go. That makes it very easy for the bank to determine that the funds are exempt and the levy/garnishment wouldn't touch any of it. Have another account to put money coming from other places.
Opening another account is a possibility to consider.