COVID Relief payments to the Deceased: A $1.4 Billion Oversight
Washington — June 25, 2020
A government watchdog reported Thursday that nearly 1.1 million coronavirus relief payments, totaling approximately $1.4 billion,were erroneously sent to deceased individuals. This revelation comes as the U.S. continues to grapple with the economic fallout of the COVID-19 pandemic and the effectiveness of the government’s response.
The Scope of the Problem
The Government accountability Office (GAO), Congress’ auditing arm, highlighted these erroneous payments in its report on the government’s coronavirus relief programs. The report examined the distribution of more than 130 million “economic impact payments” sent to taxpayers as part of the $2.4 trillion coronavirus relief package enacted in March. These payments, designed to provide immediate financial assistance to Americans, were intended to alleviate the economic strain caused by widespread lockdowns and job losses.
Rep. Carolyn Maloney, D-N.Y., chair of the House Committee on Oversight and Reform, expressed serious concern, stating, “GAO found that more than $1 trillion in taxpayer funds have already been obligated — including more than $1 billion to deceased individuals — with little transparency into how that money is being spent.”
While the IRS has requested that survivors return the funds, the legal obligation to do so remains ambiguous.
Why Did This Happen?
The primary reason for these errors was a delay in reporting death records to the IRS. Tax experts acknowledge that such a lag is almost unavoidable, especially given the unprecedented speed at which the relief payments were disbursed. The IRS,under its legal interpretation at the time,did not utilize death records to prevent payments to deceased individuals for the initial three batches of payments,the GAO report stated.
The IRS made payments based on information from 2018 or 2019 tax returns. These payments were technically considered a rebate on 2020 taxes. The expedited process aimed to deliver aid quickly, but it inadvertently led to payments being sent to individuals who had passed away as filing those returns.
“We are starting from these two soundbites and working backward,” said former Taxpayer Advocate Nina Olson, who now runs the nonprofit Center for Taxpayer Rights, highlighting the complexities and potential misinterpretations surrounding the issue.
Legal ambiguity and Recovery Efforts
the IRS requested the return of these payments in May.The payments are often sent to an heir or executor of their estate. In some cases, the check may even denote that the person is deceased next to their name, if the payment is based off a final tax return completed after their death.
Though, legal experts have questioned the government’s authority to demand repayment. Olson has stated that “ther is nothing in the law prohibiting payments from going to the deceased. Nor is there anything in the law requiring people to return the payments. And she notes that the language used on the IRS website does not say that returning the payments is required by law.”
A Broader Context of Relief Program Issues
This revelation of significant erroneous payments to deceased individuals adds to the scrutiny of the government’s massive relief program. It follows earlier disclosures that several major restaurant chains and publicly traded companies received emergency loans under the $670 billion program for struggling small businesses,raising concerns about the equitable distribution of funds.
Critics argue that insufficient oversight and inadequate safeguards allowed for these errors and potential abuses to occur. Recent data indicates that the improper payment rate across the federal government remains a persistent challenge. According to a 2024 report by the Office of Management and Budget (OMB), government-wide improper payments totaled over $247 billion in fiscal year 2023. While not all improper payments are fraudulent, they represent a important loss of taxpayer dollars.
one specific case in California involved a family who received a $1,200 economic impact payment for their deceased mother. Initially, they intended to return the money, but after consulting with a legal professional, they learned that they were not legally obligated to do so. They ultimately decided to use the funds to cover outstanding medical bills incurred before her death.
The Counterargument: Speed vs. Accuracy
While the erroneous payments are undoubtedly concerning, some argue that the urgency of the pandemic necessitated swift action, potentially compromising accuracy. The primary goal was to inject money into the economy as quickly as possible to prevent a complete collapse. Proponents of this view suggest that the benefits of rapid distribution outweighed the costs of some inevitable errors.However, critics maintain that better planning and more robust data verification processes could have significantly reduced the number of improper payments without sacrificing speed.
FAQ: Economic Impact Payments and Deceased Individuals
| Question | Answer |
|---|---|
| Am I required to return an Economic Impact Payment received for a deceased relative? | Legal experts disagree on whether there is a legal obligation to return the payment. Consult with a tax professional or estate attorney for personalized advice. |
| What should I do if I receive a payment for a deceased person? | Contact the IRS to report the issue. They may provide instructions on how to return the funds, if you choose to do so. |
| Why did the IRS send payments to deceased individuals? | The IRS used data from 2018 or 2019 tax returns to expedite payments. A lag in reporting death records contributed to the errors. |
| How has the IRS addressed this issue in subsequent relief programs? | the IRS has implemented stricter verification procedures, including cross-referencing data with the Social Security administration’s death records, to minimize improper payments. |
| Where can I find more information about Economic Impact Payments and related issues? | Consult the IRS website or seek guidance from a qualified tax professional or estate attorney. |
