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1.1 million dead people were sent $1.4 billion in coronavirus payments

Stack of money and a tax return form. [401(K) 2012/Flickr]
June 25, 2020

Almost $1.4 billion in payments intended to stimulate the U.S. economy amid the coronavirus outbreak instead went to more than 1.1 million deceased people, according to a new government report.

A report by the Government Accountability Office (GAO) released Thursday outlined a number of problems within the federal coronavirus response, including the issuing of stimulus checks to deceased Americans.

“The Internal Revenue Service (IRS) and the Treasury moved quickly to disburse 160.4 million payments worth $269 billion. The agencies faced difficulties delivering payments to some individuals, and faced additional risks related to making improper payments to ineligible individuals, such as decedents, and fraud,” a portion of the GAO report reads. “For example, according to the Treasury Inspector General for Tax Administration, as of April 30, almost 1.1 million payments totaling nearly $1.4 billion had gone to decedents.”

The misdirected payments came as the federal government moved to enact a $2 trillion relief package passed at the end of March. The relief package provided for up to $1,200 in stimulus payments to individual taxpayers, based on their income levels. Individuals who earn $75,000 or less in adjusted gross income would get direct payments of $1,200 each, while those making more than $75,000 would see smaller direct payments. Those making $99,000 or more would be excluded entirely from the direct payments.

The new GAO report indicated the cause of the misdirected payments may have been caused by a lack of data sharing between Social Security administrators and the U.S. Treasury or Bureau of Fiscal Services (BFS).

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The Social Security Act provides IRS access to SSA’s full set of death records, but does not provide such access to Treasury and BFS, which distribute payments,” the GAO report reads. “We have previously suggested that Congress consider amending the Social Security Act to explicitly allow SSA to share its full death data with Treasury for data matching to prevent payments to ineligible individuals.”

The GAO noted that such data sharing between the SSA and the Treasury likely would not have prevented the misdirected payments, however sharing data with the Treasury “could help reduce similar types of improper payments in other circumstances.”

It is unclear how the federal government plans to recover the misdirected payments

The GAO stated in its report, that the IRS “announced that if a payment was issued to a deceased or incarcerated individual, the total amount should be returned. However, IRS does not currently plan to take additional steps to notify ineligible recipients on how to return payments.”

Many of the coronavirus stimulus payments were deposited into the same back accounts taxpayers used to file their taxes and receive refunds for their 2018 tax filings. Around the same time lawmakers were preparing the coronavirus relief package, the Treasury Secretary Steven Mnuchin announced the 2019 tax filing deadline had been pushed back from April 15 to July 15.

Taxpayers encountered other problems with having their payments deposited in the same accounts they used to pay their taxes for the previous year. The military-oriented financial institution, USAA previously faced backlash amid claims it had taken coronavirus relief payments from accounts that held negative balances. The American Propsect reported concerns among some financial watchdog groups that relief payments being deposited in old accounts could be left at the mercy of the financial institutions that received them