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April 21, 2020


Can debt collectors get your stimulus check?

President Donald Trump recently signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law. This law allows for a federal stimulus check to go to qualifying taxpayers in an effort by lawmakers to help taxpayers find their financial footing while navigating this pandemic. The exact amount varies, depending on the particulars of each taxpayer, but generally allows for a $1,200 payment.

Federal lawmakers may have failed to protect the stimulus checks

Lawmakers wrote protections into the law to help better ensure the funds reach the taxpayers. The Internal Revenue Service (IRS), for example, cannot seize the funds to cover late tax bills. The only exception provided by lawmakers within the bill was the ability for the checks to cover late child support payments.

But were the protections enough? Unfortunately, critics point out the bill fails to provide protection against collection from private debt collectors. Surely, if the lawmakers wanted to keep the IRS from grabbing these funds, they also wanted to keep the money from debt collectors. Although this seems likely, without language barring garnishment, levies, and other legal tools used by debt collectors to seize these funds, taxpayers may have little protection against the efforts of the debt collectors.

State lawmakers intervene to protect taxpayers

As a result, some states are stepping in to help better ensure the funds reach their intended recipients and shield them from debt collectors. Texas lawmakers took such actions last month, forging the path for others. Governors of Illinois and Washington state signed similar orders and Oregon Governor Kate Brown was the most recent, signing an executive order that expressly prohibits debt collectors from these actions.

Tax Controversy