Last week, the Government Accountability Office (GAO) issued a 400-page report assessing the implementation of legislation responding to the COVID-19 pandemic. The report’s most eye-catching finding was that, as of April 30, the IRS had sent $1.4 billion in stimulus rebates under the CARES Act to dead people. The finding was highlighted in numerous media reports, including a satirical account of the stimulus provided to the heavenly economy.
One media story declared that the payments to the deceased were a problem of “astonishing scope.” In reality, however, there is no cause for concern.
To begin, the payments to the dead comprised less than
1 percent of total rebate payments. Trying to identify and prevent those
payments would have delayed all of the payments, in contravention of the CARES
Act’s command that the rebates be paid “as rapidly as possible.” Even if the
$1.4 billion of payments to the dead were improper, they would be a small price
to pay to expedite $200 billion of urgent payments to the living.
In any event, the payments to the dead were legally proper. As I and several other observers have explained, people who were alive at the beginning of 2020 are clearly eligible for the rebates under the text of the CARES Act, even if they died later in the year before the payments were disbursed. Although the question is a little more complicated, careful analysis of the legislative text indicates that people who died in 2018 and 2019 are also eligible for the rebates.
According to the GAO report, IRS attorneys recognized that deceased recipients were eligible, based on the text of the CARES Act. However, President Donald Trump and Treasury Secretary Steve Mnuchin responded to media reports criticizing payments to the dead by denouncing the payments and demanding that family members return them to the government. The IRS then modified its list of frequently asked questions to reflect that position.
Nevertheless, the president, the Treasury Secretary,
and the IRS have no authority to amend the laws passed by Congress. If
Congress’s failure to disqualify the recently deceased was an oversight, Congress
can fix its mistake by passing a new law.
Then again, there may not have been a mistake.
Congress may have wanted payments to go to the bereaved families of the
recently deceased, including those who have died from COVID-19.
Until Congress says otherwise, the IRS has no authority to block rebate payments to the recently deceased.