New stats don’t bode well for error-free coronavirus stimulus payments

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Federal agencies are increasingly sending incorrect benefit payments to Americans, a government watchdog said as the Internal Revenue Service prepares to send more than $292 billion in direct payments to households as part of the government’s coronavirus response.

Federal agencies sent about $175 billion in improper payments in fiscal year 2019, about a $24 billion increase from the prior year, according to a report from the Government Accountability Office. Improper payments include those that were sent to the wrong person, should not have been made, or were issued in incorrect amounts.

The Treasury Department and IRS are preparing to send direct payments to lower- and middle-income households — up to $1,200 for each adult and $500 for each child under certain income thresholds -- as part of the coronavirus stimulus signed into law last week.

The payments are intended to reach people quickly, which former IRS officials say could lead to errors. The agency is relying on tax return data — which could be out of date or non-existent — to determine where to send payments.

The IRS has said people who receive less than they are due can get the additional amount when they file next year’s tax return. Those who receive more than they’re owed won’t have to pay it back.

Wednesday’s GAO report studied efforts to identify the causes of improper payments from programs in six federal agencies, including Education Department grants and loans, the Agriculture Department’s food stamps, and Social Security old age, survivors and disability insurance.

The earned income tax credit, overseen by the Treasury Department and administered by the IRS, had the highest error rate -- 25.3% -- of the programs the GAO studied. These are the same entities responsible for distributing the virus stimulus checks.

“Although agencies report improper payment estimates annually, the federal government is unable to determine the full extent to which improper payments occur or reasonably ensure that actions are taken to reduce them,” according to the report published Wednesday.

The Treasury Department said in response that it continues to work with the IRS to develop legislative proposals to reduce erroneous payments.

Bloomberg News
IRS Treasury Department Coronavirus GAO Payments
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