About $1.4 billion in economic stimulus payments went to dead Americans, the Government Accountability Office has announced in a new report.
The GAO report noted that speed was of the essence in developing responses, but there was a price.
“Given the sweeping and unfolding public health and economic crisis, agencies from across the federal government were called on for immediate assistance, requiring an unprecedented level of dedication and agility among the federal workforce, including those serving on the front lines to quickly establish services for those infected with the virus,” the report read.
“Consistent with the urgency of responding to serious and widespread health issues and economic disruptions, agencies have given priority to moving swiftly where possible to distribute funds and implement new programs. As tradeoffs were made, however, agencies have made only limited progress so far in achieving transparency and accountability goals.”
According to the report, $1.4 billion went to dead Americans because the IRS chose not to learn from the past.
“Treasury officials said Treasury and IRS used many of the operational policies and procedures developed in 2008 for the stimulus payments, and therefore did not use the death records as a filter to halt payments to decedents in the first three batches of payments,” the report read.
“However, in 2013, GAO identified weaknesses in IRS processes that allowed payments to deceased individuals and recommended corrective actions. As a result, IRS implemented a process to use death records to update taxpayers’ accounts in order to identify and prevent improper payments.
“Bypassing this control for the economic impact payments, which has been in place for the past seven years, substantially increases the risk of potentially making improper payments to decedents.”
Despite that, the GAO was told by “a Treasury official from the Office of Tax Policy” that “Treasury was unaware the payments may go to decedents.”
Upon investigating, the IRS began removing payments to the dead beginning with the fourth batch of checks.
By then, $1.4 billion had gone out the door to more than one million dead Americans. The IRS put a notice on its website telling those who received money “that if a payment was issued to a decedent or incarcerated individual, the total amount should be returned,” according to the GAO report.
But the report found a flaw with that idea.
“IRS does not currently plan to take additional steps to notify ineligible recipients on how to return payments,” the report read.
“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 IRS needs to “consider sending a similar letter to all recipients or a subset of ineligible recipients notifying them about the payment return process. Without exploring cost-effective options to communicate the payment return process, ineligible recipients who would otherwise want to return the payments may be unaware how to do so.”
In a response within the report, the IRS said it agrees with the GAO about following up with recipients to provide information on how to return the money.
The report also urges Congress to give the IRS access to the Social Security Administration’s death data as a means to avoid repetitions of the error.
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