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Illustration: Sarah Grillo/Axios

A chunk of stimulus payments is missing in action, thanks to a mix up that put as many as 13 million checks into invalid bank accounts.

Why it matters: The IRS (by law) was supposed to get all payments out by Friday. Now the onus could shift to Americans to claim the money on their tax refund — further delaying relief to struggling, lower-income Americans.

What's going on: The newest COVID-19 relief bill — signed in the final days of 2020 — mandated the $600 payment to those making up to $75,000 per year (or twice as much for joint filers making up to $150,000) get out by Jan. 15.

  • The fast turnaround meant “some payments may have been sent to an account that may be closed or, is or no longer active, or unfamiliar,” according to the IRS website.

To get a sense of the speed: It took 19 days to distribute half the first-round payments last spring, but two-thirds of payments were out the door just a week after the latest bill became law, according to an analysis by the Committee for a Responsible Federal Budget.

  • Billions of those dollars are in the process of being returned to the IRS by tax preparers because of the error, though the IRS would not say how many payments were incorrectly deposited.
  • Jackson Hewitt estimates funds were deposited in 13 million accounts that were no longer open.

How it works: These accounts are typically set up by tax prep companies, most often used by financially constrained taxpayers to get their refunds faster.

  • Some tax preparers told CNBC that the money would be deposited starting Feb. 1.

What’s next: It’s up to those whose payments haven’t been disbursed by today to claim what’s owed on their tax return.

  • You can wait until the money shows up, or you’re going to file your return and claim your money there,” Janet Holtzblatt, a senior fellow at the Tax Policy Center and former official at the Treasury Department’s Office of Tax Analysis, tells Axios.
  • “There’s going to be confusion” about which option to pick.

Of note: Any refunds that also claim the earned-income tax credit — which offsets tax bills for lower income workers — can’t be issued before mid-February, prolonging the delay as the Washington Post points out.

What to watch: The incoming Biden administration wants to issue another round of direct payments. Depending on the timing, the IRS could be juggling those checks at the height of tax season.

  • “I can never say with IRS that things are impossible, but it's going to be a challenge to get those payments out during filing season,” Holtzblatt says.

You can check the status of your stimulus payment — and whether you can expect it by paper check, debit card or direct deposit — here.

Go deeper

Updated Jan 22, 2021 - Politics & Policy

Biden to attempt "emergency economic relief" by executive order

President Biden. Photo: Mark Wilson/Getty Images

President Biden will continue his executive action blitz on Friday, issuing two more orders in an attempt to provide immediate relief to struggling families without waiting for Congress.

Why it matters: In his second full day in office, Biden is again resorting to executive actions as he tries to increase payments for nutritional assistance and protect workers' rights during the pandemic.

Lawmakers call for Israel-Hamas ceasefire amid aerial bombardments

Combination images of Republican Sen. Todd Young and Democratic Sen. Chris Murphy. Photo: Michael Reynolds-Pool/Getty Images/Greg Nash-Pool/Getty Images

Sen. Todd Young (R-Ind.) and 28 Senate Democrats on Sunday called for a ceasefire between Israel and Hamas as fighting continued into the night.

Driving the news: Young, a ranking member of the U.S. Senate Foreign Relations Subcommittee on Near East, South Asia, Central Asia and Counterterrorism, joined panel Chair Chris Murphy (D-Conn.) in a bipartisan statement saying: "Israel has the right to defend itself from Hamas' rocket attacks, in a manner proportionate with the threat its citizens are facing.

Bill Gates faces scrutiny over relationship with Microsoft employee, Epstein ties

Photo: Alessandro Di Ciommo/NurPhoto via Getty Images

Representatives for Bill Gates pushed back on claims Sunday that he left Microsoft's board because of an earlier sexual relationship and against two other reports detailing more extensive ties with Jeffrey Epstein than had previously been reported.

Driving the news: Microsoft said in an emailed statement to Axios that it "received a concern" in 2019 that its co-founder "sought to initiate an intimate relationship with a company employee in the year 2000," but denied a Wall Street Journal report that its board members thought Gates should resign over the matter.