Some of the more than 130 million economic impact payments that went out to taxpayers as part of the $2.2 trillion economic relief package were sent to dead people. That happened mainly because of a lag in reporting data on who is deceased.
This is the first time the IRS has asked for the money back from the deceased taxpayers’ survivors. Some law experts said the government may not have the legal authority to require it be returned.
Trump and Mnuchin have both said publicly in recent weeks that money sent to deceased taxpayers should be returned. But the IRS didn’t issue any formal guidance until last week. On Wednesday, it updated its website, stating that if a person died before the payment was issued, the money should be returned. It also provided instructions on how to do so.
The IRS and Treasury did not say what would happen if these payments were not returned or otherwise repaid.
Former Taxpayer Advocate Nina Olson said that there is nothing in the law prohibiting payments from going to the deceased.
Nor is there anything in the law requiring people to return the payments.
“We are starting from these two sound bites and working backward,” Olson, who now runs the nonprofit Center for Taxpayer Rights, said.
The relief payments were made to taxpayers based on the information filed on their 2019 or 2018 taxes. But it is considered a rebate on 2020 taxes. The government used the prior tax forms to help speed along payments to the public to offset some of the economic devastation from the coronavirus pandemic.
The problem is, some people who filed those taxes may no longer be alive. Those payments are sent to an heir or executor of their estate. If the payment is based off a final tax return completed after their death, an economic impact payment check may even denote that the person is deceased next to their name.
It’s confusing at best. But it also would be a legal and logistical mess for the government to try to take back all the money that has been distributed, Olson and others said.
“They don’t have a legal leg to stand on,” Olson said.