This National Consumer Law Center (NCLC) annual advisory on tax-time consumer protection issues includes:
- Stimulus payments and the COVID crisis. This year brings even greater confusion and complexity to tax filing than usual because of the economic fallout from COVID-19:
- Tax season was delayed for several weeks because of changes to the tax law from the December 2020 stimulus package. Taxpayers should know that their Economic Impact Payments (EIP), i.e., stimulus payments claimed through a tax return and offsets, such as the Earned Income Tax Credit and Child Tax Credit are not, right now, protected from garnishment by debt collectors. Congress can, and should, fix this but they must act soon.
- Filing a 2020 tax return will be important for those who did not receive their EIP, including those who do not normally file tax returns because their income is so low and those whose payments bounced when sent to temporary bank accounts set up by paid preparers.