Two weeks ago we reported that in the rush to flood the population with plastic trinkets (i.e., $1,200 checks) just so the natives don't get restless and realize that while they are getting scraps corporations, hedge funds, banks and PE firms are again getting billions, the Treasury has mistakenly mailed checks to deceased people.
As Republican Congressman from Kentucky Thomas Massie — who one recalls was a 'lone voice in the wilderness' seeking to torpedo the multi-trillion bailout bill as it added to the national debt and increased Federal Reserve secrecy and power, among other things — ranted on Twitter two weeks ago just as some 80 million Americans received their direct deposits: "Ok this is insane, but just the tip of the iceberg."
Ok this is insane, but just the tip of the iceberg. This is a direct text to me from a friend. I called to confirm this actually just happened. pic.twitter.com/GBRPcmYMXW— Thomas Massie (@RepThomasMassie) April 15, 2020
It now appears the Treasury Secretary agrees: on Wednesday Steven Mnuchin confirmed - just in case there is any confusion - that dead people aren’t eligible for the $1,200 stimulus payments some of them have been getting, and that their relatives and estates should pay the money back to the government.
“You’re not supposed to keep that payment,” Mnuchin told the WSJ in an interview. “We’re checking the databases, but there could be a scenario where we missed something, and yes, the heirs should be returning that money.”
Yes, you certainly missed something: since the payment is based on those past tax returns, some people who died in 2018 or 2019 have received money, either by direct deposit or by mail (their survivors haven’t been sure about what to do with it). The CDC estimated that just over 2.8 million Americans died in 2017 (the last year data is currently available) - which suggests the possibility that all totaled almost $3.4 billion in stimulus money could have gone to dead people (assuming each got a check for $1,200 and that their family estates filed taxes).
Technically, the payment is a new tax credit for tax year 2020 of $1,200 per adult and $500 per child, and the payments now are based on 2018 or 2019 tax filings. That said, it isn't clear how many payments the Treasury Department has sent to dead people or what efforts the IRS will take to claw back any payments it deems erroneous.
The economic-relief law passed by Congress - the first of many as the US transitions to a Universal Basic Income society, i.e., free money for everyone - created a $292 billion program of payments to Americans to cushion the economic blow from the coronavirus outbreak. Already, the government has made more than 89 million payments totaling over $160 billion, with another wave hitting bank accounts and mailboxes this week. Tax experts have been puzzling over the payments to dead people since they started appearing in bank accounts earlier this month.
"My [dead] husband was a wonderful money manager, and I think he would be happy to know he was still getting a stimulus payment,” said Heather Frazier of Wilmington, N.C., who received a $1,200 direct-deposit payment for her husband, Rob, who died in June 2018. “If they want the money back or whatever, I’ll pay it back."
As the Journal explains, other parts of the law contemplate a situation in which someone gets a payment now that’s larger than what they would ultimately be able to claim on their 2020 tax return. That can happen if the person’s income goes up into the range where the benefit is reduced. In those cases, the government won’t reclaim any of the money. But the dead are different because they would have been ineligible for any money to start with.
Mnuchin didn’t differentiate between people who died in 2018 and 2019 and those who passed away or will die in 2020. People who die this year still may have a tax-filing obligation for 2020, so a case could be made that they are eligible even if those who died before this year weren’t. One hopes that doesn't also mean that one has to file their taxes even if one is dead.
The IRS has yet to offer written guidance to taxpayers on this issue. In practice it may prove difficult for the government to get the money back. It may be easier for some paper checks; the envelope for some payments includes a box to check and return if the recipient is deceased.
On April president Trump said that the U.S. would get the money back: “Everything we’re going to get back. But it’s a tiny amount."