IRS refused to pay stimulus checks, wrongly claiming taxpayers were dead

The IRS has been criticized for sending stimulus checks – and even a few checks – to deceased people. But a new audit by the Inspector General’s Office shows that the IRS also has reversible problems: it refused to send checks to living people because they claimed to be dead.

The problem began after the pandemic. The IRS told taxpayers that their accounts had been locked, because they believed the person was dead.

The inspector general reported that tens of thousands accounts were stuck, which meant taxpayers were unable to receive their stimulus payments and could not file tax returns or collect refunds.

The IRS and Social Security Administration had to be involved in the red tape for the taxpayers to remove them from the dead list.


The inspector general stated that “Even though the deceased account lock was designed to prevent fraudulent tax returns from being filed, it has the unintended result of preventing legitimate taxpayers from filing a return and receiving a refund.” These errors add to the burden of taxpayers to resolve the issue, as well as to the IRS workload because they receive additional phone calls or correspondence.

The IRS has taken steps to resolve the issue. The IRS said it took steps to solve the problem.

Initially, the inspector general flagged 77 868 accounts that showed signs of being deadlocked erroneously as of January 1, 2022. The IRS checked again and found that 20222 accounts needed to be unlocked.

The inspector general’s updated numbers for 2022 flagged 14193 additional accounts that could have been locked erroneously between Jan. 2, and Oct. 29, of that year.

Inspector General said that the IRS is still reviewing these accounts.

The audit found that accounts can be blocked because of errors at the IRS or the Social Security Administration master death list.

Daniel C. Cohen of Consumer Attorneys wrote in May about this issue, saying that it occurs “more often than you think”.

He said that the problem may be as simple as an incorrect digit in communication between the Social Security Administration and a credit reporting company. The consequences aren’t as simple.

He wrote: “Being listed by the IRS as ‘deceased,’ is a major inconvenience.”

The government has always had to deal with the dead.

The IRS issued $1.4 billion of stimulus checks to people who were dead early in the pandemic. The IRS said that it did not believe it had the authority to withhold payments under federal rules.

It was a matter of understanding the law.

The problem of identifying who is alive or dead, and sharing that information, is a persistent one.

The Social Security Administration manages the Death Master File (DMF) which is known by government agencies as the DMF. The file is created based on alerts sent by family members, banks, funeral homes and the U.S. Postal Service, among other agencies.

Social Security will be sharing the data it holds with federal and state agencies who pay benefits.

Both sides of the ledger can have errors.

Benefits can be improperly paid when a death has not been reported. In one instance, the niece of a woman that died in 1971 still collected her checks almost 50 years later. In 2020, the government will also send a pandemic-stimulus check.

There are also cases when a person’s death is registered, but they are still alive.

Sometimes the wrong report is submitted. Sometimes the agency receives an accurate report, but it is matched to the wrong person. A data entry error can mark someone dead.

In January of this year, the IRS was still unable to unlock 52.5 millions accounts in its history.

The IRS will send a notification to the taxpayer if they try to file a return on a locked account. They’ll also suggest ways to get the lock removed.

Inspector General looked at 9,646 notices that were issued by the beginning of last year. He found that in more than 70% cases, accounts should not have been locked.

Investigators found that, although Social Security’s DMF is usually to blame, some accounts were locked by the IRS even though their Social Security records did not indicate they had died.

Inspector General said that the IRS should clearly state on the notice to taxpayers that they can contact the IRS for help in clearing a lock, rather than direct them to Social Security.

The IRS acknowledged that it would update its employee guidelines in an official response. The IRS rejected the suggestion to update the notice and said taxpayers should “not hesitate” to contact them if they are unable to resolve their issue.