The federal government sent coronavirus stimulus checks to more than one million dead people, totaling $1.4 billion in bogus payments, according to a new audit Thursday.
IRS lawyers said the way the law was written, the agency didn’t have the power to stop payments to people who filed 2018 or 2019 tax returns, even if they later died, according to the Government Accountability Office.
The administration said its goal was to get money out as quickly as possible, so it followed the same procedure used in the 2008 stimulus payments during the Wall Street collapse, which also didn’t screen death records.
The IRS has since decided that dead people shouldn’t get payments and has said the 1.1 million such payments should be returned — though it “does not currently plan to take additional steps to notify ineligible recipients on how to return payments.”
The GAO said that could leave lots of taxpayers’ money in the wrong hands.
“Ineligible payment recipients who do not visit IRS’s website or do not have internet access may not be aware of the process to return payments,” the audit said.
The report was GAO’s first broad look at how the government has responded to coronavirus and the nearly $3 trillion in federal spending Congress has approved to deal with the pandemic.
Investigators found hiccups and potential fraud throughout the system, with state unemployment programs overwhelmed and the Small Business Administration moving slowly to audit billions of dollars in coronavirus loans.
Yet they also praised agencies for their speed in getting money out the door.
The Treasury Department made nearly 159 million stimulus payments, totaling $268 billion, over two and a half months. By contrast, in 2008 it took two months to mail 800,000 payments in 2008, Treasury officials said in their response to the GAO audit.
Payments have been made in batches, and checks went out to dead people in the first three batches. By the fourth batch, those payments had stopped.
Part of the problem is that the checks were based on IRS data, but were mailed by the Treasury Department. The IRS has access to Social Security’s death records, but the Treasury Department does not.
IRS loaned Treasury access to the records for the fourth batch of payments.
The tax agency also said it’s worried fraudsters are stealing payments by going online, accessing taxpayers’ accounts through stolen identity information, and routing future payments to their own bank accounts.