The federal government sent coronavirus stimulus checks to more than 1 million dead people, totaling $1.4 billion in bogus payments, according to a new audit Thursday.
IRS lawyers said the way the law was written, the agency didn’t have the power to stop payments to people who filed 2018 or 2019 tax returns, even if they later died, according to the Government Accountability Office.
The administration said its goal was to get money out as quickly as possible, so it followed the same procedure used in the 2008 stimulus payments during the Wall Street collapse, which also didn’t screen death records.
The IRS has since decided that dead people shouldn’t get payments and has said the 1.1 million such payments should be returned — though it “does not currently plan to take additional steps to notify ineligible recipients on how to return payments.”
The GAO said that could leave lots of taxpayers’ money in the wrong hands.
“Ineligible payment recipients who do not visit IRS’s website or do not have internet access may not be aware of the process to return payments,” the audit said.
The report was GAO’s first broad look at how the government has responded to coronavirus and the nearly $3 trillion in federal spending Congress has approved to deal with the pandemic.
Investigators found hiccups and potential fraud throughout the system, with state unemployment programs overwhelmed and the Small Business Administration moving slowly to audit billions in coronavirus loans.
Yet they also praised agencies for their speed in getting money out the door.
The Treasury Department made nearly 159 million stimulus payments, totaling $268 billion, over two-and-a-half months. By contrast, it took two months to mail 800,000 payments in 2008, Treasury officials said in their response to the GAO audit.
Democrats said the Trump administration bore the blame for the checks to dead people.
“Where’s the Republican oversight?” said Sen. Charles E. Schumer, Democrats’ floor leader in the upper chamber. “This is a $3 trillion package. And every small bit of oversight that the Republicans have done has had to be pushed by Democrats.”
Rep. James Clyburn, chair of the House committee set up to oversee coronavirus activities, said GAO investigators were stymied in attempts to pry loose some information from the administration.
“This obstruction must end,” the South Carolina Democrat said.
In particular, the Small Business Administration rebuffed attempts to get information on the $349 billion it has distributed in loans under the Paycheck Protection Program.
Congressional oversight panels also faced difficulties in getting information about PPP loans from the administration, though they recently reached an agreement on access to more information.
The federal Health and Homeland Security departments also shot down GAO’s attempts to get information on how the national stockpile of equipment such as ventilators was distributed.
GAO’s chief, Comptroller General Gene Dodaro, will testify to Mr. Clyburn’s committee Friday about the findings, and it’s likely the stimulus payments will be a major focus, even though the Treasury Department says that issue is behind it.
Payments were made in batches, and checks went out to dead people in the first three batches. By the fourth batch, those payments had stopped.
IRS loaned Treasury access to the records for the fourth batch of payments.
The tax agency also said it’s worried fraudsters are stealing payments by going online, accessing taxpayers’ accounts through stolen identity information and routing future payments to their own bank accounts.
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