Dead People Got $1.4B In Stimulus Pay Due To Legal Finding

By Mike LaSusa
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Law360 (June 25, 2020, 10:26 PM EDT) -- A legal interpretation offered by the Internal Revenue Service helped lead the federal government to send $1.4 billion worth of pandemic-related stimulus payments to people who have died, according to a government watchdog report published Thursday.

The U.S. Government Accountability Office said the IRS legal team advised that it didn't have the authority to exclude dead people from receiving payments under the $2 trillion COVID-19 relief package known as the Coronavirus Aid, Relief and Economic Security Act, as long as they had filed a tax return in 2019.

That interpretation helped cause the U.S. Department of the Treasury to send more than a million payments to those no longer living, totaling some $1.4 billion, the GAO said.

"IRS has access to the Social Security Administration's full set of death records, but Treasury and its Bureau of the Fiscal Service, which distribute payments, do not," the watchdog agency said. "GAO recommends that Congress provide Treasury with access to the Social Security Administration's full set of death records, and require that Treasury consistently use it, to help reduce similar types of improper payments."

The report also found that the pressing nature of the pandemic contributed to the issue because the CARES Act required stimulus payments to go out "rapidly as possible."

The strain the pandemic has put on government agencies emerged as a broader theme throughout the report.

"Consistent with the urgency of responding to serious and widespread health issues and economic disruptions, agencies have given priority to moving swiftly where possible to distribute funds and implement new programs," the GAO said. "As tradeoffs were made, however, agencies have made only limited progress so far in achieving transparency and accountability goals."

In the case of other economic support programs implemented in the wake of the pandemic, such as the Paycheck Protection Program, the GAO found that relaxing certain standards in order to get loans out quickly may have opened the door to increased fraud by borrowers.

Additionally, the report noted that the pandemic has pushed state unemployment systems to the brink, and it made preliminary recommendations for improvements to other aspects of the federal government's pandemic response, such as virus testing, supply distribution and aviation preparedness.

The report is set to be discussed Friday on Capitol Hill at a hearing held by the U.S. House of Representatives Select Subcommittee on the Coronavirus Crisis.

Meanwhile, Senate Republicans are currently gathering ideas for another COVID-19 relief bill, including the possibility of another round of $1,200 stimulus checks for struggling American families, that they hope can pass the Senate in July and build on March's CARES Act.

Republicans have resisted calls for swift action on the Health and Economic Recovery Omnibus Emergency Solutions Act, a $3 trillion relief bill passed by House Democrats in May, and a meeting was called Tuesday with U.S. Treasury Secretary Steve Mnuchin to get an update on job growth, retail sales and plans for moving forward with economic recovery efforts.

Mnuchin told lawmakers at the meeting that creating jobs and caring for children should be priorities for the next pandemic relief bill in the Senate.

-- Additional reporting by Stephen Cooper. Editing by Jay Jackson Jr.

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