Association’s Hodgens shares best practices regarding stimulus checks and deceased individuals

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The Internal Revenue Service updated its FAQs on stimulus checks and deceased members last week, making it clear that deceased members are not eligible for payments.

The IRS guidance does not, however, place requirements or obligations on credit unions and other financial institutions regarding stimulus deposits paid to deceased individuals, rather, the guidance is addressed to the individual who received the stimulus funds, explained Sarah Hodgens, the New York Credit Union Association’s director of compliance.

Specifically, credit unions are not responsible for preventing ACH stimulus deposits from posting to an account, rejecting properly endorsed EIP checks or otherwise returning payments made to deceased individuals, Hodgens said. However, “some credit unions may want to provide where to find repayment information as a member service,” Hodgens advised.

Hodgens also said that, if a credit union is presented with a check payable to a deceased member, “it would be advantageous to not accept the item, even if properly endorsed, based on the IRS stating these funds should be returned by the recipient.”

IRS repayment instructions, which are outlined in question 41 of the IRS FAQs, explain how an individual should return a stimulus deposit to the IRS based on where they live, Hodgens said. For uncashed checks, the payee should void the check and return it to the IRS, and for cashed checks and ACH transactions, the payee should mail a personal check to the IRS, she said.

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