More than a million stimulus payments totaling nearly $ 1.4 billion went to dead people after the Treasury Department and the IRS, seeking to get cash as quickly as possible, neglected to use death records to avoid payments to the deceased, according to a new surveillance report.
The Government Accountability Office (GAO) report, which looked at how the nearly $ 3 trillion stimulus package was administered, said the IRS generally uses third-party data, such as death records maintained by the Insurance Administration Social to avoid wrong tax refund claims.
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The CARES Act, passed by Congress and signed by President Trump in late March, provided $ 1,200 for adults and $ 500 for children to help revitalize the economy after it was largely closed in response to the coronavirus crisis. . Payments were distributed based on a 2018 or 2019 tax return, and total payments totaled up to $ 269 billion.
But with economic stimulus checks sent in April and May in response to the COVID-19 crisis, the Treasury and the IRS “did not use death records to stop payments to people who died for the first three batches of payments due to the legal interpretation under which the IRS was operating. “
The IRS attorney reportedly “determined that the IRS did not have the legal authority to deny payments to those who filed a statement for 2019, even if they had died at the time of payment.” He also advised the “discretion” provided in the CARES Act (which authorized payments) to apply the same set of rules to those who filed a 2018 statement but not one in 2019.
Treasury officials also cited language in the CARES Act that required payments to be made “as quickly as possible” as to why the Treasury and the IRS used policies and procedures developed in 2008 for stimulus payments, and consequently “They did not use death records as a filter to stop payments to the deceased in the first three batches of payments” in an effort to fulfill that mandate from Congress.
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The report said the IRS had implemented a process to use death records to update taxpayer accounts in 2013, and that bypassing that control “substantially increased the risk of making improper payments to the deceased.”
The report, citing the Tax Administration’s Inspector General of the Treasury, says that $ 1.4 billion went to people who died as of April 30.
Treasury officials told GAO that “upon learning that payments had been made to the deceased, the Treasury and the IRS, in consultation with the attorney, determined that a person is not entitled to receive a payment if he or she has died on the due date. “
Officials then removed those payments from the fourth batch of payments, and on May 6, the IRS announced that payments to dead or incarcerated persons should be returned. However, he said he did not plan to take any further steps to notify people of how to return them.
It is unclear how much of that money could have been spent, whether family members or other associates were able to access their accounts for direct deposits or were in any way able to cash checks.
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The report recommends a series of steps, including that the IRS take more efforts to notify people how to return such payments, and that Congress amend the Social Security Act to allow SSA to share death data with the Treasury.
President Trump said this week that he wants to do another round of stimulus checks, though he did not say when or how many the checks would be.
“We will make another stimulus package, it will be very good, it will be very generous,” he said.
