More than 1 million deceased Americans received stimulus payments totaling over $1 billion, according to a government watchdog agency in a report released to Congress on Thursday.
The payments were granted under the $2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act to help tide Americans over as the pandemic ripped through the country and forced the economy to a halt. The payments totaled as much as $1,200 to individual taxpayers and $2,400 for married couples filing jointly. The government granted an additional $500 per qualifying child under the age of 17.
The numbers are an alarming demonstration of a rushed—and flawed—payment scheme to get stimulus payments out to millions of Americans during the coronavirus crisis. Here’s what you need to know.
Government Didn’t Use Death Records When Cutting Checks
There have been previous reports of the government sending stimulus checks to the deceased, but the scale was previously unknown. The new report by the Government Accountability Office (GAO) reveals the government disbursed a shocking amount of money to Americans who are no longer living.
According to the report, 1.1 million deceased Americans received stimulus checks, totaling nearly $1.4 billion, as of April 30.
The report found that the IRS did not use third-party data, such as death records maintained by the Social Security Administration, to check if recipients were still living for the first three batches of payments sent out.
The IRS didn’t use the death records to stop payments to deceased Americans due to “the legal interpretation under which the IRS was operating,” according to the report. Though an internal working group raised questions about administering payments to deceased individuals in late March, agency lawyers determined the IRS did not have legal authority to deny payments to individuals who filed tax returns in 2018 or 2019, even if they were no longer living.
Language in the CARES Act also pushed the Treasury to go forward with distributing payments to deceased relatives, according to the GAO report. The law mandated stimulus checks be paid as “rapidly as possible.” As a result, the Treasury and IRS used the policies and procedures developed to deliver stimulus payments in 2008, which did not include checking death records.
GAO Earlier Warned of Potential Problems
In 2013, the GAO brought up risks associated with not checking death records before making payments and recommended corrective actions that the IRS implemented to prevent improper payments. However, the IRS did not use those updated processes while making the 2020 stimulus payments, according to the report.
“Bypassing this control for the economic impact payments, which has been in place for the past seven years, substantially increased the risk of potentially making improper payments to decedents,” the report’s authors wrote.
The GAO report also raises flags about the absence of a plan to notify ineligible recipients on how to return payments. According to the GAO, the government should have enacted an outreach plan, including sending letters, since not everyone has access to the IRS website. The GAO says the IRS has the capability of sending letters, citing the example of the letters it sent to individuals about where their stimulus payments were distributed to.
What to Do if You Received a Check for a Deceased Relative or Spouse
Receiving a stimulus check for a deceased relative can be an unsettling situation. But it doesn’t mean that money is now yours just because the recipient is no longer alive. Individuals who don’t return checks of deceased spouses or relatives could incur a penalty and face up to 10 years in prison.
If you received a stimulus payment for a deceased relative, you need to return it to the IRS immediately, according to guidance from the IRS. If you received a physical check, you should write “Void” in the endorsement section on the back of the check and mail it back to the IRS.
If the payment was made via direct deposit, or by a paper check that has already been cashed, you should write out a personal check or money order and send it back to the IRS. The check will need to include specific information, like the Social Security number or Taxpayer Identification Number of who the stimulus payment was made out to, and a brief explanation of why it’s being returned.
You can find the IRS mailing addresses under question 64: “What should I do to return an Economic Impact Payment (EIP) that was received as a direct deposit or paper check?” on the Economic Impact Payment Information Center website.
The entire payment for a deceased individual will need to be returned unless the payment was made to joint filers and one of the spouses is still living. In that case, only the portion of the payment for the deceased individual will need to be returned, according to the IRS. That amount would be equal to $1,200 unless the adjusted gross income of the couple exceeded $150,000. If an individual cannot deposit a stimulus check because it’s issued to both spouses and one is deceased, they can return the check and have it reissued by including a note explaining the situation.
A government watchdog report finds the IRS sent $1.4 billion in stimulus checks to over 1 million deceased Americans. The report states the IRS does not currently have a process in place to notify ineligible recipients or families that they do not qualify for the checks. If you received a check for a deceased relative or spouse, the payment should be returned to the IRS immediately or else there could be legal consequences.