1. Immediate Technical Fixes

The IRS can undertake a series of immediate administrative reforms to automate certain benefit payments, improve outreach to nonfilers, and optimize the nuts-and-bolts delivery of IRS benefits. These commonsense items can be partially or entirely implemented in 2021, to increase coverage of EITC, CTC, and EIP; and to increase the portion of the benefits that actually reach their intended beneficiaries. Many, to the IRS’s credit, were partially implemented during EIP distribution in 2020.

The 10 items can be considered in three broad categories. Items 1-5 get non-filers into the system, in some cases specifically for claiming EIPs. Items 6-8 ensure that those who file get all of the credits that they deserve. Items 9-10 are delivery/optimization recommendations.

Reaching Non-filers (Items 1.1-1.5)

For all IRS benefits, the most likely households to be underserved are those who do not file taxes at all (so-called “non-filers”). Around 30 million households—including nearly 10 million with earned income—do not file taxes each year,¹ largely because their income is low enough that they are not by law required to do so.² With the EIP, nearly all distribution challenges have stemmed from trying to reach this population. With the EITC, two-thirds of eligible non-recipients are non-filers, representing 3-4.5 million households.³ Historically, this population has been more or less invisible to the IRS, existing outside its core tax-return-driven system. But it is important to keep in mind that the IRS actually has considerable information about non-filers. Most have some income reported to the IRS via information returns like forms W-2 and 1099. It is estimated that, between information returns and tax returns, the IRS has data on 99.5 percent of American adults, meaning that over 90 percent of non-filers are in fact known to the IRS (though the precision and accuracy of that data may vary).

The goal regarding non-filers is to get them the benefits they deserve—a process which may or may not require them to file taxes. In the short term, neither EITC nor CTC can be reasonably paid out without a tax return; both are heavily dependent on family composition and income data that taxpayers must formally attest to. (In the longer run, it is possible to imagine a significantly amended CTC that does not require a return,⁴ but a credit anything like the EITC will always require some sort of income confirmation.⁵) For EIP on the other hand, the IRS can impute eligibility using data on hand with high precision,⁶ and indeed in 2020 paid large numbers of EIPs in the absence of explicit tax returns. For EIP #1 and #2, under current law, the IRS is no longer authorized to pay the credits as advances outside the normal tax return process, so filing is a necessary step.⁷ But for a prospective EIP #3, however, the IRS may again pursue steps to issue payments to non-filers without any type of return.

Non-filers exist because filing taxes is hard, millions of households earn so little they are not required to file,⁸ and existing interventions have proven insufficient to make tax filing easy and free for all Americans. In the long run, this core issue must be systemically addressed. (See Section 2 for such a solution.) In the short run, though, there is much the IRS can do to bring more non-filers into the system.

Over the course of 2020, the IRS ran an unprecedented outreach campaign to non-filers, encouraging them to file and thus claim the EIP. The work began in the spring, with the IRS making detailed publicity materials available to community organizations and other partners. Then, in September, for the first time, the IRS put its W-2 and 1099 data to direct use, identifying nearly 10 million EIP-eligible non-filers and sending them letters inviting them to file⁹ and claim the EIP.

This program was an important proof of concept, that the IRS can use its vast trove of information return data to directly encourage benefit take-up. Moreover, it could be significantly improved. The IRS could send multiple rounds of letters, conduct extensive user testing of messages and design (including plain-language rewrites), and collaborate with states (via their tax departments, with which the IRS can exchange data) to implement additional methods of direct outreach. The IRS could also build on federal government outreach efforts for other programs with high reach, for example the Census, which used trusted messengers and multiple modalities to contact hard to reach groups.

Meanwhile, the agency could continue to more actively partner with community organizations and other partners doing their own outreach. The IRS could provide summary statistics about which eligible non-filer households are still outstanding—including zip codes,¹⁰ age ranges,¹¹ and industries¹² with high rates of eligible non-filers. And the agency could solicit additional feedback about what informational materials or other support would be beneficial to partners.

In future years, when there is no EIP, this outreach program would encourage non-filers to file so as to claim EITC and perhaps CTC.¹³

Outreach to non-filers is not enough on its own, however. In fact, a host of recent experiments on EITC take-up have found that direct outreach to non-filers alone yielded minimal or zero impact on their tax filing rates [see Elizabeth Linos et al (2020), Jacob Goldin et al (2021), John Guyton et al (2016)]. Direct outreach might be sufficient if non-filers were simply unaware of the benefits of filing; but the overwhelming majority of non-filers have filed at some point in the past¹⁴ and know the benefits of doing so. Lack of awareness is simply not the principal barrier to filing. Rather, non-filers see tax filing as a significant burden, even overwhelming, and are afraid of making mistakes in doing so, which dissuades them from seeing the process through. A team led by Nicole Rappin at Code for America interviewed many such non-filers, documenting this dynamic; in the words of one of them: “I was always worried I was going to make a mistake. I was always like ‘oh my gosh, I’m going to make a mistake, and the IRS is going to come after me.’”¹⁵ Outreach alone amounts to inviting non-filers into the house through a locked door. Alongside better outreach, the IRS needs to unlock the door: The agency needs to make filing easier and more straightforward for non-filers.¹⁶

In 2020, to facilitate access to EIPs, the IRS did just this: The agency launched the Expedited Filing Portal (more commonly known as the Non-Filer Portal ),¹⁷ by which households who are not required to file taxes could register for the EIP without filing a complete tax return. The portal generated a simplified tax return, containing just enough information for the IRS to calculate and issue the EIP. At least 7 million households used the portal, likely an outright majority of the population who were eligible to use it.¹⁸ The portal proved that a simple filing experience breaks down a relevant barrier for many households. [The tool was also especially critical for Social Security Administration (SSA) and Veterans Affairs (VA) beneficiaries who automatically received payments for themselves, but needed a simple way to declare their dependents and receive supplemental payments, as Sens. Ron Wyden (D-Ore) and Ben Cardin (D-Md.) forcefully—and ultimately successfully—advocated throughout 2020.]

In Section 2, we argue that this precedent should serve as the basis for far-ranging filing reforms over the course of the next several years. Such lofty goals cannot be accomplished in 2021, however. In the near term, the IRS should maintain the 2020 edition of the portal. It is true that many of the people who would use the portal already did so last year and will now automatically receive EIP #3; but, if the IRS and outside partners are planning to redouble their EIP outreach efforts in 2021, it is counterproductive to simultaneously retreat to a world where it is harder to register for EIP. Moreover, the IRS should examine the feasibility of quickly executing the following improvements:

• Plain language on all landing pages. (Language on forms likely cannot be legally changed in short order.)
• Clarifying edits to the Spanish-language edition of the portal, which users report is even more impenetrable than the English version.
• Mobile responsiveness, for users accessing the form via smartphone. (This item may not be possible with the existing front-end.)
• Limited expansion of front-end functionality allowing users to affirmatively claim EIP #1 and #2 as Recovery Rebate Credits. (In short, the addition of Line 30 from the 2020 Form 1040 to the Portal.)
• Limited expansion of front-end functionality, including collecting sufficient data to pay EITC and CTC for most eligible taxpayers. (In June 2020, the IRS committed to such a step, telling Sen. Sherrod Brown (D-Ohio) that it would be “the future of the IRS.”)

This last point is critical. While the 2020 Expedited Filing Portal was overwhelmingly successful, it had one unintended consequence: Many taxpayers used it to claim the EIP without realizing that it prevented them from e-filing a later complete 2019 tax return to claim other credits, and thus forewent their (sometimes larger) EITC payment in favor of the EIP.¹⁹ [See this article for the problem’s impact on one such taxpayer, and Sen. Michael Bennet’s (D-Colo.) letter to the IRS on the issue for further context.] The IRS must ensure this does not happen in 2020. The agency can do so via some combination of: (a) asking enough information to simply pay the EITC and CTC; (b) asking enough information to determine likely eligibility and following up with simple worksheets (called CP-09 and CP-27; see Section 1.7 for more detail) to confirm further eligibility details; (c) waiting to launch the portal until the vast majority of EITC claims have already been submitted, and there is less competition between divergent filing processes; and (d) providing very clear warnings on the landing page about the tradeoffs of using the portal vis-a-vis access to other credits.

It is likely that at least one million eligible incarcerated people did not receive EIPs #1 and #2, and, if no significant action is taken, will not receive the third.²⁰ This group may represent as much as 20 percent of the still-unserved EIP-eligible population. Reaching this population is the fastest way for the IRS to dramatically increase EIP coverage rates.

The incarcerated population—nearly all of whom have income below the filing threshold and are thus by definition non-filers²¹—represents a special case in the distribution of EIPs. People who are incarcerated cannot reliably be reached by outreach letters to their previous known address, and they generally do not have access to the internet to use a simplified filing portal. Moreover, this population was the subject of litigation and changing policies over the course of 2020. Early in the year, the IRS paid EIPs to incarcerated people like anyone else. Then, the agency decided these payments should not be allowed, halting their distribution, and even attempting to claw back those that had been issued. A class-action suit was brought on behalf of a nationwide class of incarcerated people, and a federal court held on September 24 that the IRS’s policy of denying these EIPs was unlawful. Rather than quickly issue the payments, the IRS appealed and lost again in mid-October, when the court also ordered the IRS to undertake outreach steps to incarcerated people, and extend the postmark deadline for 2019 returns. With these delays, the agency’s website did not state incarcerated people’s likely eligibility until October 8²² and did not provide clear instructions for incarcerated people until October 29, less than a week before the court-ordered extended November 4 deadline for paper returns.²³ The court-ordered outreach mailings to incarcerated people likewise did not reach correctional institutions until late October, leaving their recipients just days to take action. And yet even many of those who managed to meet this deadline did not receive EIPs, as many of the 1040s filed by incarcerated people in the aftermath of the ruling were not processed before the December 15 deadline for allowing payments.²⁴

To make matters still worse, prison rules have gotten in the way of payments and filing processes. Payments arriving on debit cards were confiscated in many correctional institutions, which generally have no method to apply them to prisoners’ accounts. And, some institutions have dutifully confiscated tax forms sent in or out of prisons because, historically, the IRS advised that incarcerated Americans filing taxes were committing fraud, and urged correctional facilities to crack down on the circulation of any tax materials.²⁵

As a result, there are likely around a million incarcerated Americans who never filed to claim EIP at all, and likely many tens of thousands who tried to file after the September 2020 court order but never had their claims processed. Still others allegedly received payments via a debit card that never reached them, and do not know what to do next.

The IRS can undertake the following steps now to reach the incarcerated population:

• Automate payment of EIP #3 to all incarcerated people, using the same processes the IRS followed for SSA and VA beneficiaries. The IRS receives yearly data from correctional institutions under 26 USC 6116 on 2.3 million incarcerated people, including their Social Security Number (SSN), release date, and institution. This is more than enough data to issue checks to all incarcerated people who have not received EIPs.²⁶
• Mail copies of the 2020 Form 1040 to every correctional institution, since filing a 2020 tax return via Form 1040 is now the only way for incarcerated individuals to access EIPs #1 and #2 as Recovery Rebate Credits, and to ensure they receive EIP #3 as an advance payment if automated payments fail. (Via the aforementioned correctional data sync, the IRS has the address of every institution in the country, and already implemented a similar process in October 2020 under court order, but does not appear to have done anything similar in 2021.)²⁷ The mailings should include: (1) two copies of the Form 1040 per incarcerated person, so they can keep one for their own records without accessing a copier; (2) one sheet of clear, plain-language instructions per inmate, clarifying what information must be provided, and how to claim EIPs #1 and #2 as Recovery Rebate Credits;²⁸ and (3) critically, guidance to the correctional facilities that incarcerated people are permitted (and indeed should be encouraged) to fill out these forms, despite previous guidance that IRS forms in prisons were contraband—and explicit instructions to provide this updated guidance to correctional officers. The mailing should also be accompanied by public announcements underscoring the permissibility of the forms in prisons.
• Provide a single mailbox for Forms 1040 filed by incarcerated people, and a dedicated team to process them. Having all incarcerated people file their returns to a single dedicated office within the IRS—rather than filing to disparate local offices across the country—makes it easy for the IRS to identify this group of returns, and allows the administration to assess progress in serving this population. (The IRS in late 2020 set up just such a dedicated address in Austin for these claims.) Dedicating a single team to processing these returns will ensure that any unique issues affecting returns from incarcerated people will be quickly identified and addressed.
• Issue any payments to incarcerated people in the form of checks rather than debit cards. While some institutions—especially federal institutions—have managed to accommodate debit cards, checks are a lower bar, and all correctional institutions have experience accepting checks on behalf of incarcerated people and depositing them into commissary accounts.
• Re-issue via paper check any EIPs #1 and #2 that were originally issued to incarcerated people via debit card but were not received. Many debit cards were intercepted by correctional institutions and did not reach the intended recipients. The IRS can easily identify these payments by determining which debit cards were never activated, and the agency has authority to reissue such payments per an internal IRS chief counsel memorandum dated July 9, 2009, “Replacement Checks for 2008 Economic Stimulus Payments.”

In April 2020, the IRS issued payments to about 20 million SSA and VA beneficiaries who had not filed taxes, using payment data from those agencies to issue EIPs.²⁹ As noted above, for EIP #1 and #2, absent an act of Congress, such automation is no longer possible, as households must file returns to claim the EIP as a Recovery Rebate Credit. But, for purposes of a prospective EIP #3 in the American Rescue Plan, the IRS will again be free to automate payments without a tax return, and it is critical to repeat the process for SSA/VA beneficiaries.

But importantly, in early/mid-2021, many new beneficiaries will have joined the rolls since April 2020; in an average year, 5.6 million people begin receiving Social Security alone. If and when the IRS uses SSA- and VA-beneficiary data to auto-pay EIP #3 to non-filers, it must perform a new data sync with those agencies, to ensure that automation includes any new beneficiaries.

As with Item 1.4, this recommendation under current law applies to prospective EIP #3 only, as EIPs #1 and #2 can no longer be auto-paid as advances.

Via W-2 and 1099 data (so-called “information returns”), the IRS knows a good deal about non-filers who cannot be identified using SSA, VA, or corrections data, including their addresses and SSNs. It is possible that this data may be sufficient to automatically issue EIPs via paper check, to the person’s last known address. The most significant hurdle for such a plan is the unknown reliability of address data on potentially somewhat-outdated information returns. A 1099 issued for a one-time gig in early 2020, for example, may record an address where the recipient no longer lives, especially for a low-income population that is less likely to have a stable address. The IRS may consider restricting auto-payments to people with relatively recent information returns, and relatively stable addresses over the last several years. The IRS may also cross-reference its address data with other address datasets (from other federal agencies, from state departments of revenue, or from commercial datasets) to identify and remove families who may have moved.³⁰

If practicable, at least in some cases, this measure would partially obviate the need for items 1.1, 1.2, and 1.4 for purposes of EIP #3. That said, those measures would still be necessary for other credits and, under existing law, for EIPs #1 and #2. Moreover, even a robust program to automate checks on the basis of wage data would probably miss a meaningful portion of non-filers who have moved or who did not have reliable and recent information returns in the first place. As such, this item complements other items more than it replaces them.

Payments to Non-claimant Filers (Items 1.6-1.8)

Tax forms are complicated, and filers generally have to explicitly claim the credits they qualify for. Unsurprisingly, they often fail to do so. Each year, 1.5-2 million EITC-eligible households file taxes but fail to claim the EITC they are entitled to—about a third of the EITC participation gap.³¹ (The IRS does not publish similar numbers for the CTC, and EIP has no such analogue since all known eligible households were automatically paid.) In the long run, as with non-filers, a better tax filing system would solve this problem, collecting necessary data items by default so that eligible filers do not slip through the cracks (see Section 2). In the short run, the IRS can get money to these households through a combination of automatic payments and outreach.

Automatic payments were the keystone of the EIP program. For the most part, rather than wait for in-need households to proactively navigate byzantine tax forms to request an EIP, the IRS simply paid them using the best information on hand. The IRS should generally do the same automation for EITC- and CTC-eligible households.

The simpler case pertains to childless families accessing the EITC. As one of us previously argued at greater length, the IRS has sufficient data from a standard tax return to automatically pay the EITC to childless households who do not claim it. The sole data element not clearly available to the IRS is affirmation that the taxpayer lived in the United States for six months of the tax year.³² But the IRS can infer this from data provided on information returns, and can accept the risk of mild overpayments in a few edge cases. That the six-month residency requirement is the only true sticking point has been made abundantly clear from a 2018 Treasury Inspector General for Tax (TIGTA) report and follow-on correspondence between the IRS and Sens. Sherrod Brown and Catherine Cortez Masto (D-Nev.).³³

While significantly more complex, the IRS also has enough information on families with children to pay out the EITC in some cases. On top of the six-month residency requirement described above, the IRS also needs to determine how many qualifying children the taxpayer has. But most EITC qualifying children can be inferred from the dependent listing on Form 1040. Form 1040 includes dependents’ SSNs, and their relationship to the taxpayer. Any dependent with a valid SSN, whose relationship type falls into certain categories, should be a qualifying child under EITC. (Note the converse is not true; some EITC qualifying children will be missing from the dependents listing.) Minor exceptions can apply in cases where two different taxpayers may claim the child, and tiebreaker rules come into effect. But the IRS should be able to identify at least some cases with stable historical data on family structure, in which there are very unlikely to be competing claims,³⁴ and the credit can be paid without meaningful risk of error.

For CTC, the story is much the same as for with-child EITC; in many cases, the needed data can be inferred from the dependent listing on Form 1040.

In this way, the IRS should use its discretion to infer EITC and CTC eligibility from tax filings for households who do claim them, and increase refund payments accordingly.

Depending on how aggressive the IRS is in taking the above automation steps, there are likely to be some EITC- and CTC-eligible households who slip through the cracks of automation before tax forms can be improved—those who file taxes, fail to claim the credits, and cannot have their payment automated. Direct outreach to this population can help them access the benefits they deserve.

In fact, the IRS already does some such outreach: each year, the IRS sends several hundred thousand notices to likely EITC-eligible households, called the CP-09 for households with children, and the CP-27 for households without. (The IRS does not appear to have a similar program for CTC, but all of the recommendations here apply with equal strength to a potential analogous CTC program; or a combined program regarding both credits.) The notices alert taxpayers that they may be eligible for EITC, and allow them to claim it by filling out and returning an enclosed form. This program is a powerful proof of concept, but could be very meaningfully improved with clearer forms, more comprehensive outreach, better customer service, and more expansive targeting.

First, according to TIGTA estimates, the IRS only sends these letters to about 20 percent of non-claimant filers, sending 360,000 letters while nearly 2 million households are in the potential universe.³⁵ The IRS skips some households out of an abundance of caution (i.e., if the agency is not very confident of a household’s eligibility, it sends no worksheet)³⁶ and others for procedural reasons (e.g., the tax return was filed on paper instead of electronically).³⁷ This outreach should be conducted to every household more likely than not to be eligible; notices are cheap, and households that are not eligible will simply not respond.

Second, as with the proposed letters to non-filers, the outreach campaign should consist of more than a single letter. Experimental evidence shows that even sending a second wave of exactly the same letter solicits additional claims, boosting the overall response rate of the entire CP-09/CP-27 program by 30-35 percent.³⁸ But, moreover, the IRS has detailed data on non-claimant filers from their tax returns, including addresses and other personally identifiable information. It should prioritize making contact with them via mail, text, and email if possible, and collaborate with local or state actors in a position to do more direct outreach.³⁹

Third, and perhaps most importantly, the IRS must do a better job of designing, user testing, and proofreading the CP-09 and CP-27 letters. The greatest irony here is that the IRS has been through several recent high-profile rounds of scrutiny and improvement with these notices, but still they contain messes of legalese and highly misleading language, if not outright errors.

In 2018, TIGTA found that the CP-09 sent out in 2015 and 2016 contained fundamental errors regarding the eligibility rules, which implied hundreds of thousands of eligible recipient households were not in fact eligible for the credit. Moreover, IRS leadership knew about these errors for two years before taking action to correct them. And yet, despite TIGTA’s reprimands, the 2019 versions of the CP-09 and CP-27 also contain serious errors. First, the 2019 CP-27, covering tax year 2018, erroneously refers in its eligibility criteria to 2016 rather than 2018. (The CP-09 does not make this error.) Still worse, the eligibility criteria that TIGTA criticized in 2018 were still written incorrectly. The third page contains a list of four statements; if any of them do apply to the taxpayer then the taxpayer is not eligible. The second reads: “I did not have earned income or excess investment income in 2016 [sic].” The first half of this is correct; someone without earned income in the year is not eligible. But the second half is inverted; someone who did have excess investment income is ineligible. The sentence should read: “I did not have earned income in 2016; or I did have excess investment income in 2016.” (Of course, better yet, the sentence should be divided into two different criteria.) Additionally, the form refers taxpayers to Publication 596 to define “excess investment income.” But that phrase is nowhere to be found in Publication 596.

Meanwhile, in 2010, Saurabh Bhargava and Dayanand Manoli ran a high-profile experiment in partnership with the IRS about ways to improve the notices and increase take-up. Their results, published in 2015, found that including information about benefit amounts and simplifying the forms significantly increased response rates, and the IRS took both recommendations. Yet while the benefit amount remains in the latest version of the notices, the simplification has significantly eroded over time, with the notices today nearly as complex as during the experiment.⁴⁰

Despite all these drawbacks, the CP-09 and CP-27 programs are incredibly successful, leading nearly half of their recipients to claim the EITC in an average year.⁴¹ If the letters were written correctly and clearly, sent to more households, and paired with additional outreach, this follow-up campaign could easily sweep up the vast majority of non-claimant filers.

The December 2020 relief bill included an EITC lookback provision, allowing families to use either their 2019 or 2020 income to claim the credit, whichever maximizes the payment amount. The provision was originally intended to ensure families’ pandemic-induced financial losses are not compounded by a smaller EITC—although some advocates have pushed for the measure to be made permanent, accounting for similar income fluctuations in future years.

The lookback choice should be automated: Taxpayers should automatically receive the higher EITC payment, even if they do not explicitly elect the year that generates the larger payment. The IRS has the general authority to identify errors on returns and make adjustments like this one; there is no statutory requirement that a taxpayer file a refund claim in order for the IRS to correct a return and issue a refund.

Delivery/Optimization (Items 1.9-1.10)

The Treasury Offset Program allows state, local, and federal agencies to garnish government payments to indebted individuals. For example, federal student loan debts can be deducted from an individual’s tax refund check, or tax debts can be deducted from Social Security benefits. Given the urgent need to get funds to the poor, most anti-poverty programs and entitlement programs—including, importantly, EIP—are exempt from most offset, although the details of the offset vary by program.⁴² But the EITC and CTC, like other tax returns, are subject to offset, meaning some indebted families do not receive their checks at all. In recognition of the EITC’s role as a critical anti-poverty program and the CTC’s role as child assistance, both should be exempted from offset, like Social Security benefits or EIPs. As a rule of thumb, exempting 85 percent of EITC/CTC from all debt offset—with the possibility for more generous exemptions in the case of extreme hardship—would bring EITC and CTC offsets roughly in line with standard policy for Social Security offsets.

Under 26 USC 6402, the IRS does not have the discretion to waive offset for non-tax debts, and so Congress would need to act to exempt the EITC and CTC from offset more broadly.⁴³ However, the IRS does have the discretion to exempt tax debts from offset, and indeed does so on a case-by-case basis using so-called Offset Bypass Refunds. By automating the existing OBR process to apply to EITC-eligible and CTC-eligible households, the IRS can quickly implement the offset exemption for tax debts this year.⁴⁴

At the beginning of the EIP program, payments were available only via paper check and direct deposit, much like normal tax returns—but, in May 2020, the IRS announced that 4 million households would receive their payments on prepaid debit cards, and many more received payments this way for EIP #2 beginning in December 2020. Providing payments on debit cards is a critical accessibility step for the 5.4 percent of American households (over 7 million households) who are unbanked. These families cannot receive direct deposits, and generally must pay high fees to cash checks at predatory businesses. To receive their tax refunds, many of these households rely on Refund Anticipation Checks (RACs), in which tax preparers open temporary bank accounts to receive the refund, charging handsome fees for doing so. Debit cards are a simple way around this issue, and the IRS should make them available as an option for delivering refund payments (including the EITC and CTC) in general: taxpayers would elect when they file to receive their funds via direct deposit, check, or debit card. Given that the filing season is well underway, this is a recommendation that will likely have to wait until the 2022 filing season.

However, there are several implementation lessons learned from the EIP that the IRS should take into account for any future use of debit cards. First, as noted above, the method should be the taxpayer’s choice; sending some households debit cards at random confuses recipients and does more harm than good. Second, if the taxpayer already has a Direct Express federal debit card (from, e.g., the Social Security Administration), the IRS should offer the option of paying the EITC to this card rather than issuing a new one. Third, the IRS must improve the mailings that deliver cards to households. The EIP #1 debit cards arrived in unmarked envelopes for security reasons, leading large numbers of households to unintentionally discard them, as flagged by Rep. James Clyburn (D-S.C.) and House COVID Oversight Committee. Mailers were improved for EIP #2, with a Treasury logo on the envelope, but there is still room for improvement. The IRS should test the card mailers with actual users, and find a strategy that balances security and usability. Finally, the IRS should negotiate cardholder terms on par with—if not more favorable than—those offered for Direct Express cards. While terms did appear to improve from EIP #1 to EIP #2, the EIP card terms still lag behind those offered for Direct Express.⁴⁵ These details matter for families living paycheck to paycheck.

Depending on the timing of EIP #3 delivery and the flexibility of the IRS’s contract with Metabank, some of these delivery adjustments may be possible for EIP mailers this year.