The bank’s attempt to obtain COVID-19 stimulus from foreigners is creating a new mess: NPR
The bank’s attempt to obtain COVID-19 stimulus from foreigners is creating a new mess: NPR

The bank’s attempt to obtain COVID-19 stimulus from foreigners is creating a new mess: NPR

Dozens of people in Micronesia are suing the Bank of Guam for seizing stimulus checks that they detained. The bank did so to help the IRS recover tax payments issued by mistake.

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Robert Alexander / Getty Images


Dozens of people in Micronesia are suing the Bank of Guam for seizing stimulus checks that they detained. The bank did so to help the IRS recover tax payments issued by mistake.

Robert Alexander / Getty Images

As Congress hastened to flood the U.S. economy with stimulus money during the pandemic, it prioritized speed over accuracy. That decision resulted in the U.S. Treasury Department mistakenly sending more than a billion dollars in economic impact payments to dead people and to citizens of other countries Who is not justified for the money.

Now the IRS is trying to get some of these stimulus checks back, creating legal chaos abroad – even if it repeats the mistake that caused the problem.

In the islands of the western Pacific Ocean in Micronesia, dozens of customers have sued the Bank of Guam, saying it illegally seized stimulus deposits totaling more than $ 400,000 and in some cases returning them to the IRS.

One of those clients is Craig Reffner, a lawyer who moved from the United States to Micronesia about 25 years ago, but who has retained his U.S. citizenship and filed U.S. taxes, making him eligible for the stimulus money.

When Reffner’s first $ 1,200 check arrived in the spring of 2020, he deposited it into his Bank of Guam account. When his second check, at $ 600, arrived earlier this year, he did the same – but the bank put a stop to the payment.

“That night I was online and I was looking at my account and I noticed that it had a huge negative transaction,” Reffner remembered, “and I was thinking, ‘What in the world could have happened?'”

What happened is that the Bank of Guam received a letter from the US Treasury Department asking for help in recovering tax payments that the IRS had issued by mistake. The bank eventually gave Reffner and others their money back, but some customers never saw their stimulus checks again because the bank sent the payments back to the IRS.

Cody Spence, another Bank of Guam customer in Micronesia who is eligible for the money, said that when his first check arrived, the bank asked to see his passport before releasing it. And he said that last month, two Micronesian police officers arrived at his workplace and asked him about the stimulus money he and his family received – three rounds totaling more than $ 7,000.

These experiences made him feel “uncomfortable,” said Spence, a U.S. citizen and U.S. military veteran, “given that it was a foreign government that asked me how I received my money from my government.”

Reffner told NPR that the Bank of Guam asked some customers for copies of their tax returns to determine if they were eligible for the stimulus, and began seizing any form of payment issued by the U.S. Treasury Department, including social security checks and veteran benefits. A Micronesian citizen, Dion Bernard Asher, told NPR that the bank temporarily withheld a $ 1,200 paycheck she received for providing translation services to the U.S. Department of Justice.

The Bank of Guam said it would not comment on Micronesia’s lawsuits because the case is in a lawsuit. However, in court records and emails reviewed by NPR, bank officials said some customers received incentives they were not entitled to and that the bank is required by U.S. law to return the money. The bank’s customers claim that the IRS has no legal jurisdiction over the bank.

Even Kelleher, a vice president at Sprintax, which does U.S. tax preparation for nonresidents, said it is not the role or expertise of an overseas bank to determine whether payments for financial consequences were issued correctly.

“Hats off to the Bank of Guam if they can suddenly retrain their entire team to be non-resident tax experts, but I do not think that is the business they are in,” Kelleher said. “And I do not think it would be appropriate for them to review individuals’ tax returns and establish residence and establish treaty eligibility and establish eligibility for the stimulus check.”

He added: “They have to be very, very careful before taking that route.”

Only US citizens and US “resident aliens” are eligible for stimulus money. The term “resident alien” is a federal tax classification, and to qualify, a person must have a green card or have been in the United States for a certain period of time.

But the IRS has acknowledged that it mistakenly sent checks to many non-citizens who were not eligible. It includes non-Americans who receive Social Security and other federal benefits but who do not qualify for the stimulus because they are not nationals or “resident aliens.”

The IRS has also acknowledged having sent stimulus money by mistake to many foreign guest workers who, whether unintentionally or intentionally, have filed an incorrect type of tax return that made them appear to be resident in the United States.

Kelleher said his company has thousands of customers from about 150 countries who received stimulus checks by mistake and are now trying to return the money to the IRS. For most of them, it requires filing an amended tax return.

An increasing number of customers filing changed returns – at Sprintax, 20 times more than in a typical year – indicate that incorrect stimulus money “continues to be a problem and continues to create confusion,” Kelleher said.

Meanwhile, the IRS is still repeating the mistake that led to the trials in Micronesia.

Susanne Wigforss is a Swedish citizen living in Stockholm who has received two rounds of stimulus totaling $ 1,800, although she is not entitled to it, and she recently received a letter from the US Treasury Department informing her that a third round is on the way, for $ 1,400.

Wigforss worked in California years ago, making her eligible for Social Security but not for the stimulus money. Her first two checks were signed by Donald Trump, and after the media reported the error, she assumed the IRS would rectify the problem – until she received her third message.

“When the mail arrived and I saw, there was a letter from [the] IRS said out loud, ‘They could not possibly do this again!’ “Wigforss recalled.” But when I opened the letter, it was, signed by Joseph Biden, the White House that another check was on the way. I was stunned. “

For Craig Reffner, the U.S. citizen of Micronesia, whose stimulus check was withheld for weeks by the Bank of Guam, it is absurd that the United States continues to issue stimulus by mistake while at the same time trying to recover stimulus they issued by mistake. .

“I do not understand why President Biden would at all allow the IRS to continue operations and commit error after error after error,” he said. “I mean, it’s just a ridiculous way to work.”

An IRS spokeswoman, Sarah Maxwell, said she was not aware of Bank of Guam lawsuits or the IRS letter asking the bank for help, and she did not say how many other banks may have received a similar letter.

But she said the IRS works with financial institutions around the world to investigate suspicious tax activities, and the IRS continues to ask people who mistakenly received stimulus checks to voluntarily return them.

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