Of $1.6B coronavirus stimulus checks sent to deceased, others may have spent $500M

The IRS started sending out the first stimulus checks in April. It was a massive task, and the agency lived up to the expectations. However, it did make a few mistakes, including sending checks to deceased persons. After the IRS realized the mistake, it worked to recover those checks. Now, the agency says it has recovered 70% of coronavirus stimulus checks sent to the deceased.

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Why were coronavirus stimulus checks sent to deceased?

A Treasury Department official told the Government Accountability Office (GAO) that almost 70% of the $1.6 billion worth of checks to deceased people have now been recovered. That may imply that about $500 million (the remaining 30%) may have been spent by whoever received the checks on behalf of the dead people. The comments from the Treasury official were included in the GAO report, which was published on Monday.

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"We were unable to verify that amount by the time we finalized our work on this report," the GAO report said. "We are working with Treasury to determine the number of payments sent to decedents that have been recovered."

Under the $2.2 trillion CARES Act, those eligible got stimulus checks of up to $1,200. As per the GAO report, the IRS has sent out about 164 million payments so far. Of these, almost 1.2 million payments (worth $1.6 billion) went to deceased persons.

A point to note is that the CARES Act did not specifically exclude dead individuals from getting the payments. This is why the IRS systems were not programmed to hold checks for deceased individuals.

GAO in an earlier report, noted that the IRS and Treasury knew about the risk of stimulus payments going to dead people. Yet they went ahead, as at the time, the speed of getting payments out to millions was more important.

How did the IRS recover checks sent to deceased?

In June, the IRS admitted that it did not exclude deceased individuals from getting the payments initially. Later the Treasury and the IRS determined that people deceased at the time of payments are not eligible for stimulus payments. The agency updated its FAQ page in May asking for return of the payments sent to the deceased.

The IRS has also put instructions on its website on how to return the coronavirus stimulus checks sent to decedents. Moreover, the Treasury has also held and cancelled some of the payments sent to decedents. In June, the Senate passed a bill directing the Social Security Administration to share the death data with the Treasury Department. The objective of the legislation was to prevent any future payments to dead people.

According to the Treasury, it was planning to send letters to those who received money sent to dead people, asking them to return the checks and repay any money they had already spend from that. Treasury, however, told GAO that it didn’t actually send the letters because Congress was considering changing the eligibility requirements for the stimulus payments.