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US Government Sent $1.4B in Coronavirus Cash to Deceased Taxpayers, Watchdog Finds

FILE - A stimulus check issued by the Internal Revenue Service to help combat the adverse economic effects of the coronavirus pandemic is seen in San Antonio, Texas, April 23, 2020.

The Government Accountability Office, an independent congressional watchdog, reported Thursday that more than a million deceased Americans were sent a total of $1.4 billion in recent months, part of the government’s effort to jump-start the economy during some of the worst days of the coronavirus pandemic.

More than 160 million payments totaling $269 billion were disbursed to most Americans, with the $1,200 payments blocked for individuals earning more than $98,000 a year or couples with $198,000 in income.

In all, about 90% of Americans received the cash infusion, including $500 for children.

The GAO report said the recipients were based on the names on 2018 or 2019 federal tax returns, but the government failed to account for people who had subsequently died.

The GAO said that in order to meet the congressional mandate to deliver the payments as “rapidly as possible,” the U.S. Treasury and the Internal Revenue Service sent out the first three sets of payments without checking death records at the Social Security Administration.

The watchdog agency said lawyers for the IRS "determined that the IRS did not have the legal authority to deny payments to those who filed a return for 2019, even if they were deceased at the time of payment," and advised applying the same rule to deceased recipients who had filed a 2018 return.

Survivors of the deceased who got the government payments initially thought they could keep the payments, but the tax collection agency ruled in May that the money "should be returned."

Yet, the GAO said in its report that there currently is not a plan in place to notify ineligible recipients — nearly 1.1 million relatives of deceased people as of April 30 — on how to return the payments.

With the U.S. economy struggling to regain its footing as the number of coronavirus cases spikes, President Donald Trump said he wants to issue new stimulus checks.

But some Republican lawmakers are balking, for fear of adding to the national debt that now totals more than $26 trillion. No agreement has been reached on how much a new stimulus payment might be or who would receive it.

In addition to criticizing payments to dead people, the GAO also faulted the government’s Small Business Administration for its handling of payments to small businesses to help keep them alive and able to pay workers during the pandemic.

The GAO said some of the money from the Paycheck Protection Program was sent to large companies whose stock is publicly traded, although the intent of the program was to help small businesses.

Trump administration critics have said the SBA has refused to disclose which companies received the government assistance.

Aside from the mistakes made in disbursing payments, the GAO said the effects of the pandemic are likely to be long-lasting for many Americans.

"Both the Congress and the administration have acted to mobilize resources quickly to help the nation respond to and recover from the pandemic,” the report concluded. “However, the negative effects of the pandemic on families, communities, and health care systems and on the long-term economic condition of millions of Americans and U.S. businesses are likely to persist into the future."