IRS in hot water again over third stimulus payments sent to the deceased
30 April 2021
Millions of US citizens are celebrating this month after receiving their third Stimulus payment as part of the $1.9 trillion American Relief Act in response to the global pandemic.
However, as with rounds one and two of the initiative thousands of payments have been sent in error to people that are deceased. In general, the issue is for couples that have filed joint tax returns and one of the partners has subsequently passed away, as the stimulus payment is made to the couple rather than the separate individuals.
In response the IRS has issued a request that all payments received in the names of people that have passed away before January 1st 2021 must be returned to the agency. If the payment was a paper cheque, recipients are being asked to write "void" in the endorsement area and write a letter explaining why it is being returned it. If required, the IRS will then issue a payment for the correct amount. If the payment was received through a direct deposit, then recipients are being asked to send the IRS a cheque or money order to pay back the additional amount.
Whilst the Stimulus payment comes as a very welcome boost to many, for those suffering a bereavement of a spouse and having to deal with the added stress of returning the money, the payment is proving to be less of a boost and more of an upset. Many of the bereaved are rightly questioning why the IRS was unable to update their records prior to sending the payments since in most cases the agency would have been informed of the death, particularly since the cut-off date was over three months ago.
This is yet another example of why deceased suppression is so important. The fact that erroneous payments have been made, which are in some cases unlikely to be recouped notwithstanding, the bottom line is that sending communications to people that have passed away causes unnecessary distress to the people that are left behind at an already very upsetting time.
To understand more about how you can identify people in your database that may have passed away please get in touch.