Why is IRS canceling some coronavirus stimulus checks?

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The IRS (Internal Revenue Service) has sent out more than 160 million stimulus checks. However, not all of the checks were sent correctly. Some were sent to the wrong people, some carried the wrong amount, while some were sent to the deceased as well. Initially, the IRS said the payment send to deceased persons needs to be returned. Now, the IRS is canceling coronavirus stimulus checks send to people that have died.

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IRS canceling coronavirus stimulus checks send to dead

Stimulus checks were sent to people who filed taxes within the past two years. In a rush to send out payments quickly, the agency didn’t verify if the person who filed taxes within the past two years is still alive or not.

As per a report from an independent watchdog, the Government Accountability Office (GOA), about $1.4 billion in coronavirus stimulus payments was send to 1.1 million deceased people. After realizing the mistake, the agency asked the family members to return the check issued to the deceased individuals. This created a lot of confusion.

To avoid all the confusion, the IRS last week updated its website with new information. According to the IRS, it is canceling all coronavirus stimulus checks send to dead people. Further, the agency informed that the Bureau of Fiscal Services (BFS) is taking proper action to stop more payments from going to the deceased.

"The cancellation of uncashed checks is part of this process," the IRS said. "BFS has cancelled outstanding Economic Impact Payment (EIP) checks issued to recipients who may not be eligible, including those who may be deceased."

The Treasury is also requesting “financial institutions and other check cashing entities” to check the status of EIP checks using the Treasury check verification tools.

You need to return money in these cases

The IRS canceling coronavirus stimulus checks send to deceased persons covers just one aspect. There are other scenarios, as well. What if the stimulus check was sent via direct deposit or a check and it was cashed? In such a case, you need to return the money via personal check or money order to an IRS facility.

Another scenario is when one spouse died and another is alive. In such a case, you will have to return the payment attributed to the deceased spouse with a check. For instance, if your spouse passed away, but the IRS still sent you a $2,400 check, you will have to return $1,200 back to the IRS.

If you are returning the payment via check, make sure the check is payable to the U.S. Treasury. Also, on the check, you need to write “2020EIP,” as well as your taxpayer identification number.

In case you received the payment via a debit card, then you need to return it back to Money Network Cardholder Services. For more information on how to return the payment, visit this IRS page.