In its rush to get Coronavirus stimulus checks out, the IRS sent checks to dead people. Lawmakers have been worrying about how much money has been spent, but they could’ve saved $1.4 billion if deceased people didn’t receive payments.
Q1 2020 hedge fund letters, conferences and more
The Government Accountability Office said in a new report that the government sent about 1.1 million stimulus payments to dead people, amounting to nearly $1.4 billion. U.S. officials have been rushing out stimulus checks to deal with the coronavirus pandemic. The stimulus checks were part of the $2 trillion CARES Act, and approximately $300 billion of that package was earmarked for the stimulus payments.
The coronavirus stimulus checks were based on 2018 and 2019 tax returns, which means that some people received payments, although they passed away after filing their taxes. Debate has now moved on to what should happen to those stimulus payments that were sent to dead people.
In general, the IRS isn't requiring people to pay back any extra money they might have received. The agency said on its website that there's "no provision in the law requiring repayment of a payment." However, payments that were made to the deceased or those who are incarcerated are an exception.
The IRS and Treasury Secretary Steven Mnuchin have both said that stimulus payments sent to dead people should be returned. The IRS also issued instructions on how to return the payments here.
If you haven't cashed the check yet, write "void" in the endorsement area on the back of the check and then mail it to the correct IRS location. Go to the IRS instructions here and scroll to the bottom of the list of questions and look for the section titled "Returning the Economic Payment."
The exception is if a couple filed their taxes jointly, but then one spouse passed away. In that situation, the surviving spouse can keep the amount that was meant for them, but they must return the portion that was meant for their deceased spouse. In this situation, they will have to send a personal check or money order to the IRS with the payment that was meant for their deceased spouse.
Call for action from the IRS
The GAO report notes that the IRS doesn't have a plan in place for connecting with people who should return the stimulus checks that were sent to deceased people. The agency called on the IRS to use cost-effective options to notify those who received these payments that they need to return them and instructions on how to do so.
The IRS sent a letter informing recipients that they were receiving a payment, and the GAO suggests that the IRS send a follow-up letter to those who are ineligible to tell them to return the payments. The GAO also suggested that the Social Security Administration should share its data on deaths with the Bureau of Fiscal Service at the Treasury Department, which has been handling the coronavirus stimulus checks, to prevent errors such as this one.
Some of that data has been shared temporarily, but the GAO suggested amending the Social Security Act so the agencies could share such data more easily. CNBC notes that this isn't the first time the government has sent money to people who have passed away. Thousands of Social Security beneficiaries who had passed away also received stimulus payments during the 2008-2009 financial crisis.
