Less than a week after the Government Accountability Office said the Internal Revenue Service had reduced stimulus checks to 1.1 million dead, a report released Monday by Erin Collins, the National Taxpayer Advocate, said the federal tax collector also sent about 74,000 checks to people who were locked up by law enforcement.

The National Taxpayer Advocate is an independent office of the Internal Revenue Service, although the two agencies frequently collaborate.


The National Taxpayer Advocate recommends that the IRS not spend its resources pursuing enforcement actions against the estate of a deceased person or a family member who has received an IRS IAP for a deceased person

Like the Government Accountability Office (GAO) report, Mr. Collins noted how deceased persons were receiving checks. (The new report says the IRS issued 965,000 checks, compared to 1.1 million checks counted by the GAO.)

It is not clear what the IRS will do if taxpayers do not return the stimulus payments, Collins said in a footnote.

“However, if the IRS made the payment when it had information that the individual was in fact deceased, the National Taxpayer Advocate recommends that the IRS not spend its resources pursuing enforcement actions against the estate of a deceased person or a family member who received an [economic impact payment] for a deceased person,” she added.

Last week’s GAO report said the IRS had access to the social security administration’s death records, but did not use them when distributing the first three batches of stimulus checks.

Incarcerated Americans also receive stimulus funding

Although the IRS says that prisoners must return the money – just like relatives of deceased persons who receive cheques – the oversight office says that the collector should be more specific about who must return the money.

“A situation could arise where a taxpayer would be incarcerated in early 2020, but would be released in the midst of a pandemic – especially since a number of incarcerated individuals were released to mitigate the spread of COVID-19 in the country’s prison system,” Collins noted.

Nearly 96,000 people have been released from prisons and jails as a result of the epidemic, according to a database at the University of California Law School in Los Angles

Some state agencies have intercepted the stimulus cheques. For example, the Kansas Department of Corrections seized $200,000 in stimulus checks and returned them to the IRS, according to a corrections spokesman.

An example of wrinkles is the open-ended questions on return rules for incarcerated persons when the IRS distributed approximately 160 million direct stimulus payments under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

“While the IRS has done an impressive job of implementing the provisions of the [CARES Act] – particularly in these unprecedented circumstances – there have been several problems in implementing the most important provisions of the CARES Act,” the report said.

The IRS may need to learn quickly from these errors and prepare for a second round of direct controls in the near future. Legislators are considering another stimulus bill, and Treasury Secretary Steven Mnuchin has said an aid package could materialise next month.

The information on benefits does not take into account the fact that some Social Security and War Veterans Allowance recipients have dependants who may be entitled to the $500, according to the report. The IRS has given a deadline of May 5 for these individuals to add information about children and get the extra money.

Although Collins said that “these financially troubled people” could still claim the dependents on their 2020 tax returns, that is still a long way off. The IRS should continue to let them update their information and get the stimulus money for the dependents, she said.

The GAO report also noted the problem of missing money for dependents. Approximately 450,000 recipients of reminder checks did not receive additional money for dependents in their reminder payments, according to the report. The IRS is in the process of finding the accounts and adding the extra payments by the end of next month, according to the GAO report.

The IRS said it welcomes the report from Ms. Collins, who took office earlier this year.

“In response to COVID-19, the IRS made the reminder payments in record time,” the IRS said.

Millions of Americans began receiving stimulus funding within two weeks of the passage of the CARES law in late March. “By comparison, for the last stimulus payments in 2008, the first 800,000 stimulus payments did not begin to reach taxpayers for 75 days. Our extraordinary efforts to implement timely assistance in the wake of COVID-19 came in the midst of an unprecedentedly long application period”

The National Taxpayer Advocate’s report provided further insights into the extent of the distribution of reminder cheques.

Approximately 23 million people submitted direct deposit information to get their cheques faster, while 3.7 million people used the IRS’s “non-filer” tool. The online portal provided the IRS with the information it needed to send reminder payments to people who were not required to file an income tax return.

To date, New York has recorded the highest number of deaths due to VIDOC-19 in the United States (32,040), followed by New Jersey (15,035), Massachusetts (8,053), Illinois (6,923), Pennsylvania (6,649), Michigan (6,193) and California (6,089). Texas reported 2,455 deaths due to the virus.

The COVID-19 pandemic, which was first identified in Wuhan, China, in December, had infected 10,538,577 people worldwide and 2,658,324 in the United States by Wednesday. It has killed at least 512,689 people worldwide, including 127,681 in the United States, according to Johns Hopkins University.

The Dow Jones Industrial Index
DJIA
, +1.70


finished down slightly on Wednesday, while the S&P 500
SPX
,+1.45%


ended up slightly higher, despite an increase in coronavirus cases in some of the country’s most populous states.

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2020-07-02