What Not to Do With Those $600 Relief Checks

January 5, 2021 at 11:03 am Leave a comment

The IRS has already started sending out the $600 checks authorized as part of the long-awaited COVID relief stimulus (SEC. 6428A). With these payments has come an unprecedented level of scrutiny to deposit procedures and garnishments. Here are some of the key provisions to keep in mind.

Many of you have already begun to receive checks deposited via ACH. As Nacha explained, these payments “will be identified with a Company Name of ‘IRS TREAS 310’ and a Company Entry Description of ‘XXTAXEIP2’.” The real tricky part begins when this money actually hits your accounts. If you remember, certain financial institutions were criticized for setting off the first round of payments, and the new legislation is accompanied with prohibitions making it clear that this money is not to be garnished or set off. For instance, page 63 of the Administrative Provisions stipulates that these funds are not to be used to facilitate a levy or offset as a matter of federal or state law. 

I know for many of you that some of this is easier said than done. For instance, how are you going to handle the automatic actions taken by your systems on accounts that are already overdrawn? Last week, the New York Times highlighted the commitment of larger institutions to solve this problem by bringing their consumer accounts even for a limited period. For those of you who either do not want to or cannot take this step, I would consider putting a notice on your website explaining how members can obtain their stimulus payment.

Entry filed under: Compliance, COVID-19, Economy, Federal Legislation, HR, New York State, technology. Tags: , , , .

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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