More than one million dead Americans were sent $1.4 billion in stimulus checks, watchdog says

Outdated procedures did not filter payments through death records to halt checks

More than one million dead Americans were sent coronavirus stimulus checks from the federal government worth $1.4 billion, a watchdog agency said on Thursday.

In a wide-ranging review of the pandemic response, a report to Congress found that death records were not used to stop payments to deceased people in the first three distributions of payments under the $2.2 trillion economic recovery program.

The scope and scale of the issue came to light as Trump administration officials consider another round of stimulus checks.

The Government Accountability Office report outlines how the Internal Revenue Service and the Treasury Department sent Economic Impact Payments, worth up to $1,200 each or $269 billion in total, to more than 160.4 million Americans, based on their 2018 or 2019 tax returns.

The report said that to meet the CARES Act stimulus mandate as "rapidly as possible", Treasury and the IRS used an outdated operating procedure from 2008 that did not incorporate process changes that filtered payments through death records as a way to halt payments.

"Bypassing this control for the economic impact payments, which has been in place for the past seven years, substantially increased the risk of potentially making improper payments to decedents," the report said.

The accountability report said that the IRS does not have plans to recoup the 1.1 million payments beyond stating on its website on 6 May that payments made to dead or incarcerated individuals need to be returned.

IRS Chief Risk Officer Thomas A Brandt sent a written response to the review saying the organisation agrees with recommendations to consider cost-effective options for notifying ineligible recipients on returning the payments.

"We are currently considering options in that regard," Mr Brandt wrote.

The IRS requires the full payment to be returned unless it was made to a couple that filed jointly before a partner died, in which case only a portion of the payment needs to be returned.

The Small Business Administration was also highlighted for its Paycheck Protection Program as vulnerable to fraud due to the speed of rolling out $500 billion in forgivable loans to small businesses that were allowed to self-certify their eligibility.

The report, which recommends enacting plans to address potential fraud as an essential part of ensuring the integrity and effectiveness of the program, said the SBA failed to provide information critical to the review.

The government watchdog said it was unfortunate the public had to wait more than four months to see comprehensive information about how these programmes have been implemented.

“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 programmes,” the report said. “As tradeoffs were made, however, agencies have made only limited progress so far in achieving transparency and accountability goals.”