Dead sent $1.4B in virus aid, GAO says

Agencies issuing stimulus checks didn’t have access to death records, it finds

WASHINGTON — The federal government sent coronavirus stimulus payments to almost 1.1 million dead people totaling nearly $1.4 billion, Congress’ independent watchdog reported Thursday.

The Washington Post previously reported that the Treasury Department and

Internal Revenue Service disbursed some payments of up to $1,200 each to dead people. But the scope of the problem had not been known.

The U.S. Government Accountability Office, an independent investigative agency that reports to Congress, issued the finding as part of a comprehensive report on the nearly $3 trillion in coronavirus relief spending approved by Congress in March and

April. It said it had received the information from the Treasury Inspector General for Tax Administration in an accounting as of April 30.

The revelation comes as President Donald Trump and some members of his administration advocate for another round of stimulus checks. The news that so much money has gone to the dead could add to reluctance from some Republicans to agree to more direct relief payments.

The GAO said the payments to dead people came as the Treasury and the IRS rushed to disburse some 160.4 million of these payments totaling $269 billion after the Coronavirus Aid, Relief, and Economic Security Act was passed in March.

The problem relates partly to the fact that, while the IRS

has access to the Social Security Administration’s full set of death records, the Treasury Department and its Bureau of the Fiscal Service — which actually issue the payments — do not, GAO said.

The report said Congress should “provide Treasury with access to the Social Security Administration’s full set of death records, and require that Treasury consistently use it, to help reduce similar types of improper payments.”

The GAO also recommended that the IRS “should consider cost-effective options for notifying ineligible recipients how to return payments.” The IRS agreed with this recommendation in a response to the GAO.

The IRS has previously said stimulus payments issued in the name of dead people have to be returned. But aside from announcing on its website May 6 that stimulus payments made to dead or incarcerated individuals should be returned, the IRS does not have plans to take additional steps toward recouping the payments, the GAO said.

The report makes clear how, in the mad dash to pass legislation to prop up an economy in free-fall in the midst of an unprecedented pandemic, mistakes were made.

The Cares Act directed the

stimulus payments to people who filed 2018 or 2019 tax returns. The payments went to people making up to $99,000 annually. According to the GAO, IRS officials raised questions with the Treasury as the Cares Act was being drafted about the possibility that payments could go to people who filed tax returns but subsequently died.

However, IRS counsel determined that they did not have the legal authority to deny payments to people who had filed returns, even if they were deceased at the time of payments.

Also, Treasury officials noted that the Cares Act mandated delivery of the economic impact payments “as rapidly as possible.” To fulfill this mandate, they used procedures that had been put in place for stimulus payments issued in 2008, and as a result did not use death records as a filter.

GAO noted that in 2013 it had identified weaknesses in IRS procedures that allowed payments to go to dead people, and had recommended corrective action. IRS subsequently implemented a process to use death records to update taxpayers’ accounts to identify and prevent improper payments.

But this control was bypassed for the stimulus checks issued under the Cares Act, which “substantially increased the risk of potentially making improper payments to decedents,” the

GAO said. It also said that according to a Treasury official from the Office of Tax Policy, the Treasury had been unaware that payments might go to dead people.

Upon learning this was happening in the initial three batches of payments — which accounted for 72%t of the payments made as of May 31 — the Treasury and its Bureau of the Fiscal Service took steps to prevent the practice, obtaining temporary access to Social Security death data from the IRS.

The direct payments have gone out in several ways, including direct deposit, prepaid debit cards and paper checks. In the case of some of the paper checks, according to several people who received them and shared images with The Post, the dead recipients were clearly marked as such.

The notation DECD, for “deceased,” was included after the person’s name on the check. GAO did not address this particular issue, nor complaints from some people that their attempts to return the checks were unsuccessful.

The GAO report includes a response from Thomas Brandt, IRS chief risk officer, who wrote in part: “We appreciate and agree with your recommendation that we consider cost effective options for notifying ineligible recipients on how to return payments. We are currently considering options in that regard.”