INDIANAPOLIS (WTHR) - In an effort to send out millions of COVID-19 relief checks as quickly as possible, the IRS overlooked a very important piece of information. Thousands of those checks were sent to people that the IRS already knew were dead.
One of those people is Albert Geiersbach. The Word War II veteran and Purple Heart recipient lived most of his life in Michigan before moving south to live with his daughter in Indianapolis. He passed away two years ago at the age of 95, and last year, his family filed his final tax return after his death. Last week, his daughter found a surprise in her mailbox: a $1,200 coronavirus relief check from the U.S. Department of Treasury with her father’s name on it.
“I received a stimulus check made out to him,” Jean Graham wrote in an email to 13News. “Apparently this is a common problem in the U.S..”
What makes the problem more difficult to understand is what appears next Geiersbach’s name on the check: the letters DECD, which is the IRS code for taxpayers that the government agency has already recorded as deceased. Yet the check was sent anyway – and similar stories have been reported by the families of deceased taxpayers all across the country.
IRS says give back the money
Despite the oversight, the IRS now wants its money back. This week, the IRS posted on its coronavirus Economic Impact Payment website: “A payment made to someone who died before receipt of the Payment should be returned to the IRS.”
The federal agency also provided instructions detailing how to return stimulus payments that were sent in error.
If the payment was sent as a paper check, write "Void" in the endorsement section on the back of the check and mail it to the Treasury Department, along with a note stating the reason for returning the payment.
If the payment was already cashed or a direct deposit, the IRS says to “immediately” submit a personal check or money order made payable to “U.S. Treasury” with a note explaining why you are sending it back. According to the government’s instructions, the phrase “2020EIP” and the taxpayer identification number of the deceased person should also be included on the memo line of the check.
The IRS is instructing Indiana residents to mail their checks to:
Kansas City Refund Inquiry Unit
333 W Pershing Rd
Mail Stop 6800, N-2
Kansas City, MO 64108
Individuals who live in other states should check this website to learn which IRS location they should mail their check to.
What happens if you keep the check anyway?
Tim Dages, a certified public accountant with Indianapolis firm Bogdanoff Dages and Co, says there can be stiff consequences for individuals who choose to keep money that the IRS sent in error.
“I can’t say at this point and time what the ramifications would be if they don’t return the payment because the IRS has not clarified that yet, but the most common [consequence] is penalties and interest, and in worst case scenarios there are people who go to jail on an annual basis for tax fraud,” Dages told 13News. “It would be my recommendation for my clients that I deal with under those circumstances to go ahead and return the payment.”
Another local tax preparer contacted by 13 Investigates agreed that individuals who cash and spend COVID-19 stimulus checks mailed to deceased relatives are taking a risk.
“As of right now, the law states that people who get these payments are not required to send the money back, but because we’ve been seeing a lot of this, I think there is a high probability that lawmakers will change that when it comes to payments for people who are already deceased,” said Tim Nichols, a tax preparer at Kristel’s Tax and Accounting Service. “We’re advising our clients who got that money in error to send it back to prevent trouble down the road, or at lease not to spend it, so if the law does change, they still have it to send back.”
Graham contacted 13 Investigates to learn how she could return her father’s payment, and she now plans to send the $1,200 check back to the IRS.