About 45,000 payments of the advance recovery rebate credit, part of Democrats’ $1.9 trillion pandemic relief bill last year, were given to deceased dependents of taxpayers, according to the Treasury Inspector General for Tax Administration.
TIGTA said the problem was a computer programming error.
Meanwhile, almost 26,500 more payments were made to taxpayers who died before the January 1, 2021 cut-off date but whose death dates either weren’t reported or weren’t yet validated by the IRS.
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Some of those payments were dismissed by banks or returned as undeliverable, but nearly 19,000 were processed, TIGTA said. The IRS generally lacks the power to require repayment, the inspector general said.
The recovery rebate credit paid up to $1,400 per person. For the most part, they came in checks issued by the IRS, just like previous pandemic stimulus payments.
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The IRS made 167.4 million payments overall, and 99.48% of them were correct, TIGTA said in its report, released Thursday.
In its official response to the audit, the agency said asking it to manage the stimulus payments was like trying to fit a round peg into a square hole: The IRS is set up to collect money from people, not pay them.
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“Consequently, the automated systems at our disposal for issuing the [payments] were designed for the purpose of assessing and collecting tax,” said Kenneth C. Corbin, commissioner of the wage and investment division. “As such, not all information needed to accurately calculate every payment was available with the [payments] were determined, even if it resided in other systems at the time.”
TIGTA flagged payments to dependents that appeared on more than one tax return, meaning they were duplicates, but the IRS said it simply couldn’t track payments at the level of detail needed to prevent that kind of duplication.
The IRS did decide to work on additional safeguards to prevent payments to dead people should Congress enact another round of stimulus payments.
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Recovery rebate credit payments to dead people didn’t total much in the scheme of things — about $92 million, or a tiny fraction of the $1.9 trillion price tag of the American Recovery Act.
Nevertheless, the IRS made the payments after it was dinged in 2020 for blowing billions of dollars on bogus payments from the first round of pandemic relief.
TIGTA estimates that nearly 4.5 million erroneous payments, costing $5.5 billion, were made during the first round of pandemic relief in the spring of 2020. That includes about 2.2 million payments to deceased people, costing $3.5 billion.
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