Watchdog: IRS sent stimulus checks to 1 million dead people
WASHINGTON – More than 1 million dead people got stimulus checks from the federal government under a new federal law designed to juice the economy during the coronavirus pandemic, a watchdog agency reported Thursday.
The Government Accountability Office said that a legal interpretation left the Treasury Department and the Internal Revenue Service unable to use government death records to stop the stimulus checks from going to people who are dead.
As a result, nearly 1.1 million payments totaling nearly $1.4 billion were distributed to dead people as of April 30, the report said.
The report, which takes a critical look at the government’s response to the economic crisis caused by the coronavirus pandemic, comes as President Donald Trump and congressional leaders are considering another economic recovery package to deal with the fallout from COVID-19.
Trump signaled in interviews this week that he is open to additional cash payments to Americans as part of the next recovery package.
The initial round of direct cash payments were distributed as part of a $2 trillion package known as the CARES Act, which Trump signed into law in mid-March. In addition to the checks, the stimulus law boosted unemployment benefits and created a loan program for small businesses.
Under the CARES Act, individuals with an adjusted gross income of $75,000 or less are eligible for a onetime payment of up to $1,200 ($2,400 for joint tax returns) and $500 for each qualifying child. Those with little or no tax liability also were eligible for $1,200 ($2,400 for joint returns).
More than 159 million checks totaling $267 billion were distributed under the law, according to the IRS.
Reports of dead people getting stimulus payments started to surface in
April when the IRS began making direct deposits of up to $1,200 into taxpayers’ bank accounts. The Treasury Department acknowledged last month that some stimulus checks had been sent to dead people and said that anyone who received a stimulus payment on behalf of someone who is dead should return the money immediately.
An IRS working group charged with administering the payments first raised questions with Treasury officials about payments to decedents in late March as Congress was drafting legislation, the GAO report said.
The IRS typically uses data from other government sources, such as the death records maintained by the Social Security Administration, to detect and prevent erroneous and fraudulent tax refund claims. But Treasury and the IRS did not use the death records to stop payments to dead people for the first three batches of payments because of the legal interpretation under which the IRS was operating, the report said.
Eligibility for a stimulus payment was based on an individual’s tax returns filed for 2018 or 2019.
The IRS’s legal counsel determined that the agency did not have the legal authority to deny payments to people who filed a return for 2019, even if they were dead at the time of payment, the GAO said. IRS attorneys also advised the agency to apply the same set of processing rules to recipients who had filed a 2018 return but not a 2019 return.
The result was that Treasury and the IRS did not use death records as a filter to halt payments to dead people when it sent out the first three batches of payments, which accounted for nearly three-quarters of all of the checks that were distributed.
Upon learning that payments had been made to dead people, Treasury and the IRS determined that a person isn’t entitled to receive a payment if he or she is dead as of the date the payment is to be paid, the GAO reported. The IRS stopped payments to dead people when the fourth batch of checks were sent, the report said.