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 astonishing 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 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 that the payments to dead people came as Treasury and the IRS rushed to disburse some 160.4 million of these payments totaling $269 billion in the wake of passage of the Cares Act in March. The problem relates partly to the fact that, while 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 that 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 that stimulus payments issued in the name of dead people have to be returned. But aside from announcing on its website on May 6 that stimulus payments made to dead or incarcerated individuals should be returned, the IRS does not currently have plans to take additional steps toward recouping the payments, 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 a 2018 or 2019 tax return. The payments went to people making up to $99,000 annually. According to GAO, IRS officials raised questions with 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 they did not have the legal authority to deny payments to people who had filed a return, even if they were deceased at the time of payment.
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, Treasury had been unaware that payments might go to dead people. Upon learning this was happening in the initial batches of payments, 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 GAO report includes a response from Thomas A. 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.”
The nearly 400-page report is the first from GAO under a requirement in the Cares Act for the GAO to issue bimonthly reports on its efforts to monitor and oversee the coronavirus response. The report contains multiple findings and recommendations on a wide array of issues apart from the direct stimulus payments.
The GAO begins its report by stating that total federal spending data are not available because the Office of Management and Budget directed federal agencies that they didn’t have to report covid-19 expenditures and obligations until July -- something that was not previously known.