The IRS is providing procedures for individuals who are not otherwise required to file a return for 2019 to receive economic impact payments under the CARES Act in Revenue Procedure 2020-28.[1]  Key are new procedures for those who wish to file an electronic return, but have not been able to because they have zero adjusted gross income, resulting in their return being rejected by the IRS electronic filing system.

The Procedure outlines two methods that such individuals can use to file:

• Use the “Non-Filers: Enter Payment Info Here” tool, available at www.irs.gov/coronavirus, to submit information to the Internal Revenue Service (IRS) (the method the IRS had been pointing to previously to solve this problem); or

• File their return for taxable year 2019 using alternative tax return preparation software or paper returns that follow a simplified return filing procedure outlined in the Revenue Procedure.[2]

The IRS describes the need for the new simplified filing procedure by noting:

The Department of the Treasury (Treasury Department) and the IRS are aware that individuals otherwise not required by law to file Federal income tax returns may prepare income tax returns for State or local governments (for purposes such as establishing qualification for State or local government benefits) using tax return preparation software that can concurrently prepare both Federal and State or local tax returns. The IRS is also aware that individuals having an adjusted gross income (AGI) of zero (as opposed to AGI of $1 or more) are not able to file Federal income tax returns electronically to receive allowed economic impact payments due to tax return preparation software and return processing parameters. Section 4 of this revenue procedure provides a special procedure for eligible individuals with zero AGI who voluntarily wish to file a complete Federal income tax return electronically for taxable year 2019 to receive allowed economic impact payments. The special procedure in section 4 of this revenue procedure does not apply to a return filed on paper, which should be filed in accordance with the applicable instructions.[3]

General Simplified Return Procedure

There are actually two simplified procedures.  The first one applies in cases where a taxpayer either is able to electronically file the simplified return or files the simplified return on paper.  This procedure applies to taxpayers who are not required to file a federal tax return for 2019.

The IRS describes the simplified process as follows:

A simplified return filer (as defined in section 3.02 of this revenue procedure) will receive an economic impact payment if the simplified return filer files a Federal income tax return on Form 1040, U.S. Individual Income Tax Return, or Form 1040-SR, U.S. Tax Return for Seniors, for taxable year 2019, on paper or electronically, pursuant to the simplified procedure set forth in this section 3.[4]

A simplified return filer eligible to participate in the program is defined as follows:

For purposes of this section 3, a “simplified return filer” is an eligible individual described in section 2.02 of this revenue procedure who is not required to file a Federal income tax return for taxable year 2019 and has not filed a Federal income tax return for that taxable year. In addition, a simplified return filer must have an SSN that is valid for employment or file a joint return with an individual who has an SSN that is valid for employment if one of the joint return filers is a member of the Armed Forces of the United States at any time during taxable year 2019.[5]

Since this program is meant to solve the specific problem of getting a CARES Act payment, there is a deadline to make use of the program:

As soon as possible but not later than October 15, 2020, a simplified return filer following the procedure set forth in this section 3 must file a Federal income tax return. This filing deadline ensures that the IRS will have sufficient time to process all Federal income tax returns filed under section 3 of this revenue procedure and make all resulting economic impact payments before December 31, 2020, the last day economic impact payments may be made under § 6428(f)(3)(A). Simplified return filers are encouraged to file their tax returns electronically to speed the issuance of their economic impact payments.[6]

The IRS begins with an overview of the simplified filing process:

In the case of a simplified return filer, the IRS will process the simplified return filer’s Form 1040 or Form 1040-SR for taxable year 2019 to provide an economic impact payment, if the form is prepared in the manner required in this section 3.04. The Form 1040 or Form 1040-SR should include only the information described in this section 3.04.[7]

The Revenue Procedure then goes on to provide the following detailed guidance on what a taxpayer is to do in Section 3.04:

(2) Write “EIP2020” on form. A simplified return filer must designate “EIP2020” on Form 1040 or Form 1040-SR.

(a) If filing the Federal income tax return by mail, this text must be placed above the printed material at the top of page 1 of the Form 1040 or Form 1040-SR.

(b) If electronically filing the Federal income tax return, this text must be placed in the correct spot of the electronic filing record.

(3) Filing status. A simplified return filer must select their filing status as of the end of taxable year 2019 at the top of Form 1040 or Form 1040-SR.

(4) Required general information. A simplified return filer must enter their name, mailing address, and SSN, and the name and SSN of their spouse if filing a joint return, on the appropriate lines of Form 1040 or Form 1040-SR. If a simplified return filer and their spouse file a joint return and either the simplified return filer or the spouse is a member of the Armed Forces of the United States at any time during taxable year 2019, then an SSN for one spouse and either an SSN or an IRS individual taxpayer identification number (that is, an ITIN) for the other spouse must be entered on the appropriate lines of Form 1040 or Form 1040-SR.

(5) Individuals who could be claimed as dependents by other taxpayers. A simplified return filer must check all applicable boxes under the address lines for each individual who could be claimed as a dependent by any other taxpayer for taxable year 2019.

(6) General information regarding dependents. If applicable, a simplified return filer should provide information regarding each dependent who was under the age of 17 at the end of taxable year 2019 on the appropriate lines of Form 1040 or Form 1040-SR. For each dependent, a simplified return filer must provide the name, SSN or ATIN, and relationship to the individual. Column (4) of each line on the form must be left blank.

(7) Limited information to provide in lines 1 through 24. Except as provided in this section 3.04(7), a simplified return filer should leave blank lines 1 through 24 of Form 1040 or Form 1040-SR, even if the values for these lines are in fact not zero.

(a) Lines 2b, 7b, and 8b. A simplified return filer who files their Federal income tax return electronically must enter $1.00 on lines 2b, 7b, and 8b.

(b) Line 9. A simplified return filer who files their Federal income tax return electronically must enter the applicable standard deduction amount for their filing status on line 9.

(c) Line 11b. A simplified return filer must enter $0.00 on line 11b.

(d) Line 21a. A simplified return filer must not check the box on line 21a because the economic impact payment may not be divided among multiple accounts.

(e) Lines 21b through 21d. A simplified return filer may request the direct deposit of their economic impact payment into their account at a bank or other financial institution by entering their direct deposit information on lines 21b through 21d. A simplified return filer must not request their economic impact payment to be deposited into an account that is not in the name of that simplified return filer (for example, a simplified return filer must not request a direct deposit of their economic impact payment into their tax return preparer’s account).[8]

The IRS then goes on to describe the signature requirements for the simplified filing.

05. Signature. A simplified return filer must provide their identity protection personal identification number (that is, their IP PIN), if applicable, and sign the return under penalties of perjury. In addition, a simplified return filer may enter their identifying information of any third-party designee, if applicable, at the bottom of page 2 of Form 1040 or Form 1040-SR. A simplified return filer who has been assigned an IP PIN, but has misplaced it, may retrieve the IP PIN at https://www.irs.gov/identity-theft-fraudscams/retrieve-your-ip-pin.[9]

The economic impact payment will be computed as follows:

06 Computation of economic impact payment. Based on the information provided by a simplified return filer on Form 1040 or Form 1040-SR for taxable year 2019, the IRS will compute the amount of the economic impact payment that will be paid to the simplified return filer in calendar year 2020.[10]

As well, the procedure provides that the IRS will not challenge the accuracy of the items of income reported on a return filed in accordance with these procedures.[11]

Special Electronic Filing Procedure for Taxpayers with Zero Adjusted Gross Income

A separate procedure applies to taxpayers with zero adjusted gross income who wish to electronically file a 2019 income tax return.  The rules do not apply to a return filed on paper, only one filed electronically.[12]

A zero AGI filer, eligible to use this procedure is defined by the Revenue Procedure as follows:

For purposes of this section 4, a “zero AGI filer” is an eligible individual described in section 2.02 of this revenue procedure who has zero AGI for taxable year 2019 (that is, the eligible individual has zero AGI for taxable year 2019 reportable on line 8b of Form 1040 or Form 1040-SR) and has not yet filed a Federal income tax return for taxable year 2019. In addition, a zero AGI filer must have an SSN that is valid for employment or file a joint return with an individual who has an SSN that is valid for employment if one of the joint return filers is a member of the Armed Forces of the United States at any time during taxable year 2019.[13]

The same filing deadline applies for this purpose as applies for the general simplified filing procedure:

As soon as possible but not later than October 15, 2020, a zero AGI filer must electronically file their Federal income tax return under the procedure set forth in this section 4. This filing deadline ensures that the IRS will have sufficient time to process all Federal income tax returns filed under section 4 of this revenue procedure and make all resulting economic impact payments before December 31, 2020, the last day economic impact payments may be made under § 6428(f)(3)(A).[14]

The IRS provides the following required information instructions for this filing:

In addition to all other information required to be entered on Form 1040 or Form 1040-SR, a zero AGI filer must enter the following:

(1) $1.00 as taxable interest on line 2b of the form;

(2) $1.00 as total income on line 7b of the form; and

(3) $1.00 as AGI on line 8b of the form.[15]

The IRS provides for the following signature requirements:

A zero AGI filer must provide their identity protection personal identification number (that is, their IP PIN), if applicable, and sign the return under penalties of perjury. In addition, a zero AGI filer may enter the identifying information of any third-party designee, if applicable, at the bottom of page 2 of Form 1040 or Form 1040-SR. A zero AGI filer who has been assigned an IP PIN, but has misplaced it, may retrieve the IP PIN at https://www.irs.gov/identity-theft-fraud-scams/retrieve-your-ip-pin.[16]

As with the general simplified return procedure returns, the IRS will use the information on this return to compute the economic impact payment for the taxpayer[17] and the IRS will not challenge the accuracy of items of income reported on these returns.[18]

[1] Revenue Procedure 2020-28, April 20, 2020, https://www.irs.gov/pub/irs-drop/rp-20-28.pdf, retrieved April 20, 2020

[2] Revenue Procedure 2020-28, Section 1.02

[3] Revenue Procedure 2028-28, Section 1.03

[4] Revenue Procedure 2020-28, Section 3.01

[5] Revenue Procedure 2020-28, Section 3.02

[6] Revenue Procedure 2020-28, Section 3.03

[7] Revenue Procedure 2020-28, Section 3.04(1)

[8] Revenue Procedure 2020-28, Section 3.04(2)-(7)

[9] Revenue Procedure 2020-28, Section 3.05

[10] Revenue Procedure 2020-28, Section 3.06

[11] Revenue Procedure 2020-28, Section 3.07

[12] Revenue Procedure 2020-28, Section 4.01

[13] Revenue Procedure 2020-28, Section 4.02

[14] Revenue Procedure 2020-28, Section 4.03

[15] Revenue Procedure 2020-28, Section 4.04

[16] Revenue Procedure 2020-28, Section 4.05

[17] Revenue Procedure 2020-28, Section 4.06

[18] Revenue Procedure 2020-28, Section 4.07