Earlier warnings from the Treasury Inspector General for Tax Administration went unheeded, leading the IRS to issue over 60,000 potentially erroneous stimulus payments due to computer programming errors,
Of the 60,824 potentially erroneous payments that could be traced to computer errors, TIGTA identified:
- 44,903 that went to deceased dependents who, due to being dead, were not eligible for payments;
- 8,972 duplicate payments for a spouse who had been previously issued a stimulus payment but was not successfully recorded on their tax accounts; and,
- 6,949 payments issued for dependents that have an ITIN.
In each of these cases, TIGTA had previously alerted the IRS to these programming issues in April 2021, which the IRS acknowledged. However, in all instances, the IRS did not take corrective action to address future erroneous payments. TIGTA said 5,496 of these payments were issued after the IRS had been told about the problems.
Beyond straight-up computer programming errors, which were the minority among the 1.2 million erroneous payments identified, TIGTA also faulted the IRS for disbursing funds to those claimed as dependents because the taxpayer failed to check the box indicating their status as such; it also noted that duplicate payments were sent to dependents whose ITINs appeared on more than one return; and others for reasons the IRS has yet to actually determine.
Lack of information sharing with U.S. territories like Guam also resulted in people with addresses there getting stimulus payments, as well as nonresident aliens in the U.S.
IRS systems were also said to have sent duplicate payments to people who, between 2019 and 2020, went from joint to separate filing, changed spouses, or went from married to single. On the former two, the IRS disagreed that the payments were erroneous (with TIGTA disagreeing with their disagreement) and on the final one, the IRS was unable to make the needed programming changes in time, as payment processing was based on tax years 2019 and 2020 returns simultaneously. In other words, the programming was unable to mark the account for a 2019 return to show the first payment being issued before the 2020 payment.
TIGTA also identified thousands of payments to dead people. IRS management said that, for many of them, this was because of timing issues: The beneficiaries’ date of death information was not verified before payment issuance. Other payments to deceased individuals were due to the individual’s account not being updated with the date of death information in time. The inspector general said these issues indicate a need for the IRS to update its programming to avoid these kinds of problems in the future.
“If Congress enacts additional stimulus payments, the commissioner of the Wage and Investment Division should consider additional programming changes to prevent ineligible individuals from receiving advance payments, including individuals claimed as dependents or dependents claimed on multiple returns, nonresident individuals, individuals who had a filing status or filing partner change, deceased individuals, and individuals affected by the mentioned related programming errors,” the TIGTA report advised.
The cost of the erroneous payments was estimated to be $1.9 billion. Conversely, TIGTA also noted that it identified 644,705 eligible individuals who have not received their payments, totaling $1.6 billion.
