IRS Sent $1.6 Billion To Dead People: GAO Report

The Government Accountability Office issued a report in which they reviewed the federal government response to COVID-19, and found that the Internal Revenue Service (IRS) had sent more than $1.6 billion to dead people.

In particular, GAO reviewed the distribution of funds, also knows as Paycheck Protection Program (PPP), a program that provides guaranteed loans through lenders to small businesses, and unemployment insurance.

Overall, federal obligations and expenditures government-wide of these COVID-19 relief funds totaled $1.5 trillion and $1.3 trillion, respectively, as of June 30, 2020. GAO also obtained preliminary data for six major spending areas as of July 31, 2020 (see GAO table). 

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In their recommendation to IRS, GAO highlighted the need to:

  • To reduce the potential for duplicate payments from the Paycheck Protection Program (PPP)—a program that provides guaranteed loans through lenders to small businesses—and unemployment insurance, GAO recommended that the Department of Labor (DOL), in consultation with the Small Business Administration (SBA) and the Department of the Treasury (Treasury), immediately provide information to state unemployment agencies that specifically addresses PPP loans, and the risk of improper unemployment insurance payments. DOL issued guidance on August 12, 2020, that, among other things, clarified that individuals working full-time and being paid through PPP are not eligible for UI.
  • To recoup economic impact payments totaling more than $1.6 billion sent to decedents, GAO recommended that the Internal Revenue Service (IRS) consider cost-effective options for notifying ineligible recipients of economic impact payments how to return payments. IRS has taken steps to address this recommendation. According to a Treasury official, nearly 70 percent of the payments sent to decedents have been recovered. However, GAO was unable to verify that amount before finalizing work on this report. GAO is working with Treasury to determine the number of payments sent to decedents that have been recovered. Treasury was considering sending letters to request the return of remaining outstanding payments but has not moved forward with this effort because, according to Treasury, Congress is considering legislation that would clarify or change payment eligibility requirements.
  • To reduce the potential for fraud and ensure program integrity, GAO recommended that SBA develops and implement plans to identify and respond to risks in PPP to ensure program integrity, achieve program effectiveness, and address potential fraud. SBA has begun developing oversight plans for PPP but has not yet finalized or implemented them.

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