IRS denies stimulus checks to some taxpayers, falsely declaring them deceased: Report.
An Audit Reveals IRS Mistakenly Withheld Stimulus Payments from Living Individuals
An audit of the Internal Revenue Service (IRS) has uncovered a shocking revelation: the agency mistakenly withheld stimulus payments and checks from some living people, falsely claiming that they had already died.
According to the Treasury’s inspector general office, during the pandemic, taxpayers who attempted to receive stimulus checks were informed that their accounts were locked because the IRS believed they were deceased. This error resulted in tens of thousands of accounts being deadlocked, preventing taxpayers from receiving their stimulus payments and also blocking them from filing tax returns or obtaining refunds.
“Although the deceased account lock is designed to prevent the filing of fraudulent tax returns, when there is an error, the unintended consequence is that legitimate taxpayers cannot file a tax return and receive a refund,”
The Treasury’s inspector general stated in a recent report. This error not only burdens taxpayers with resolving the issue but also increases the workload for the IRS as they receive additional calls and correspondence from affected individuals.
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The audit revealed that as of January 1, 2022, there were 77,868 erroneously deadlocked accounts. At the time of the report, the IRS had only unlocked 20,222 of these accounts, leaving the rest unresolved.
“Management noted that taxpayer accounts were improperly locked because of both human and computer programming issues when identifying the appropriate taxpayer account to be locked,”
the report stated. The IRS has made efforts to correct the locked accounts, but 63 accounts remain unresolved. The remaining 57,646 accounts were deemed appropriate to remain locked due to reasons such as long periods without filing tax returns or failure to submit necessary information returns.
Accounts can be locked due to the Social Security’s master death list or due to errors within the IRS itself, as revealed by the audit.
The Treasury’s inspector general made several recommendations, including the suggestion that the IRS should inform taxpayers that they can directly contact the agency to resolve the death-lock issue, rather than going to the Social Security Administration. However, the IRS rejected this idea and emphasized that taxpayers should not hesitate to reach out to them for assistance.
Other Problems Uncovered
In addition to the stimulus payment issue, the same watchdog conducted another review that exposed the IRS’s negligence in handling sensitive taxpayer information. The audit revealed that the IRS had lost track of thousands of microfilm cartridges containing millions of sensitive business and individual tax records.
The report, issued by the Treasury’s inspector general, criticized the IRS for its failure to comply with records management requirements and highlighted significant deficiencies in the agency’s safeguarding, storage, and accounting of sensitive taxpayer information.
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