Stimulus Update: Inactive Deposit Accounts and Garnishment

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A third round of Economic Impact Payments (EIP) will be issued soon due to this week's congressional stimulus-and-relief package signed into law by President Joe Biden. However, some credit union members’ accounts on file with the IRS from the first and second rounds of stimulus in 2020 are no longer active for a variety of reasons.

Because of this issue, there are two ways credit union members can still receive payment if they did not receive an electronic transfer from the second round of EIP (December 2020) or they foresee not receiving funds electronically from this upcoming round (in the coming days):

  • Members may be issued a check through the mail to the address the IRS has on file (the address on their most recent tax returns or as updated through the U.S. Postal Service) if an electronic payment cannot go through.
  • However, if the IRS received a rejected electronic payment from a member’s deposit account after Dec. 31, 2020, then a check was not issued to the member. The member will need to claim the 2020 Recovery Rebate Credit on a 2020 tax return. For eligibility, click here.

Stimulus Payments and Garnishment
As a reminder, credit unions in California still need to follow Gov. Gavin Newsom's 2020 executive order in conjunction with the congressional aid/stimulus package passed back then (The CARES Act). The order prohibits any lien, or right of setoff, against stimulus funds (and that consumers entitled to these funds do not have to take any action).

Moreover, this order in California has not been revoked and remains in effect; thus, it would apply to this third round of stimulus funds. You can read Executive Order N-57-20 (or click here for frequently-asked-questions on the executive order).

For Nevada credit unions, the Gov. Steve Sisolak's 2020 executive order (in conjunction with federal 2020 stimulus legislation) is still in play. The order prohibits any setoffs from COVID-19 stimulus funds; and garnishments are stayed, other than child support, spousal support, or criminal restitution payable to victims.

This order in Nevada has not been revoked and remains in effect; thus, it would apply to this third round of stimulus funds. You can read Directive 017.

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