By Naomi Jagoda, The Hill, 06/25/20
The Treasury Department and IRS sent almost 1.1 million Coronavirus stimulus payments, totaling almost $1.4 billion, to dead people as of April 30, a Government Accountability Office (GAO) paper released Thursday reported.
“Treasury and IRS did not use the death records to stop payments to deceased individuals for the first three batches of payments because of the legal interpretation under which IRS was operating,” GAO said. The watchdog was provided the figure about the number and dollar amount of payments sent to dead people by the Treasury Inspector General for Tax Administration.
The payments sent to deceased individuals are small when compared to the overall number of payments made. Treasury and the IRS have distributed about 160 million payments totaling nearly $270 billion as of May 31, according to the GAO report.
President Trump signed a $2.2 trillion coronavirus relief package, known as the CARES Act, in late March that provided for one-time direct payments for most Americans of up to $1,200 per adult and $500 per child. The payments have been a key source of relief as people have faced challenges covering their expenses due to the pandemic. Tax experts have praised the IRS for getting the payments to people quickly.
The IRS made payments to most people based on their 2018 or 2019 tax returns. The agency has also made payments based on statements related to certain federal benefits and information provided to the agency through an online web tool for people who typically aren’t required to file tax returns.
IRS officials told GAO that a working group at the agency first raised the issue of whether payments should be sent to deceased individuals when Congress was drafting the CARES Act.
The IRS’s counsel determined that the IRS didn’t have the legal authority to deny payments for people who filed a tax return in 2019, even if they were now deceased, and that the agency should apply the same processing rules for people who had filed a 2018 tax return but hadn’t yet filed a 2019 return. As a result, deceased individuals weren’t initially excluded from getting payments in the IRS’s programming, GAO said.
Treasury officials told GAO that the IRS was directed under the CARES Act to issue the direct payments as quickly as possible, so during the first three batches of payments, the IRS relied on many procedures it used to distribute rebates in 2008, which did not filter out people based on death records. One Treasury official told GAO that the department was not aware that payments would go to dead people until there were media reports on the topic.
When Treasury learned that payments had been made to dead people, Treasury and the IRS determined that people are not entitled to a payment if they are dead at the time the payment is made, and Treasury instructed the IRS to stop issuing payments to deceased individuals, according to the GAO report. The report says that the stimulus payments to dead people could be considered improper payments under a 2019 law.
On May 6, the IRS updated a frequently asked questions page to add that stimulus payments sent to deceased individuals should be returned. GAO said that the IRS doesn’t currently plan to take further steps to notify ineligible recipients about how to return payments, and the watchdog encouraged the IRS to consider cost-effective notification options. The IRS has agreed with this recommendation, according to the report.
GAO said that the IRS has access to the Social Security Administration’s full set of death records, but that Treasury and the department’s Bureau of Fiscal Service do not. The Bureau of Fiscal Service distributes payments.
GAO recommended that Congress provide Treasury with access to the full set of death records and that the department consistently uses the records in an effort to reduce improper payments.
GAO’s examination of the relief payments is one part of a broader report about the federal government’s response to the coronavirus. The watchdog said that it is currently doing additional work to evaluate the administration of the payments.