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Including ITIN filers in stimulus payments helps families and state finances

The Coronavirus Aid, Relief, and Economic Security (CARES) Act included “economic impact payments” to support families and help boost the economy as we struggle with the fallout of the COVID-19 pandemic. As many economists project a sluggish economy and double-digit unemployment through 2021, Congress has recognized a need for another round of legislation to address the public health crisis and attendant economic recession. The regulations around the CARES Act payments left out an estimated 15 million taxpayers, and they should be included in the next round of payments.

The design of the CARES Act rebates improved on the 2008 stimulus payments in many ways. One major positive change was the removal of a minimum earnings threshold, so that families with lower incomes still received the same $1,200. Another big improvement is that lawmakers authorized the Treasury to deliver payments automatically to non-filers, like those on Supplemental Security Income.

But the payments fell short in other ways. To be eligible for the rebates under the CARES Act, every person on a household’s tax return must have a Social Security Number (SSN). If, for example, a parent has an SSN, and the children in the household do as well, but the other spouse on the tax return lacks one, the entire household is disqualified. This rule excludes about 5 million children who would otherwise be eligible – more than 85 percent of whom are U.S. citizens.

That’s because not all taxpayers have or need a Social Security Number. Some taxpayers use an Individual Taxpayer Identification Number (ITIN), including, for example, nonresidents living in the United States on a student visa. There are 46,630 Arkansans living in households with at least one ITIN filer. That’s 22,850 adults and 23,780 kids who have missed out on much-needed economic relief. Including them in the economic stimulus payments would not just be fair, but also makes good economic sense for Arkansas. Had these 46,630 Arkansans not been excluded, nearly $40 million in additional federal stimulus payments would have made their way to our state.

As Congress considers another round of legislation in response to the pandemic, it’s important that these taxpayers and their families be included. The Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, recently passed by the House of Representatives, includes an additional $56 million for ITIN filers in Arkansas for the next round of stimulus payments.

Including ITIN filers in economic stimulus payments is an easy way for policymakers to ensure economic relief that is both equitable and timely.