The IRS has been looking for stimulus fraud and ineligible payments.
Due to the pandemic the IRS was required to act quickly during the crisis to rush out stimulus payments while also dealing with the new and changing tax laws.
Unfortunately, identity thieves began taking advantage of the stimulus by filing fraudulent returns. Consequently, after the IRS discovered the activity, they created specific filters to identify potentially fraudulent filings. When a return was identified to be potentially fraudulent, it was forwarded to an IRS team for review. As of Nov. 11, 2020, the IRS recognized 457,325 questionable returns and had determined that 38,273 returns were a fraudulent stimulus claim.
“In 2020, the IRS found itself in uncharted waters, as did the nation,” wrote Kenneth Corbin, commissioner of the IRS’s Wage and Investment Division. “The coronavirus disease (COVID-19) pandemic presented some of the greatest challenges to the IRS history, both in terms of being able to carry out our mission in protecting the health and safety of taxpayers and our own workforce.”
The Treasury Inspector General for Tax Administration (TIGTA) determined that approximately 4.4 million potentially ineligible payments were made to individuals as of July 16, 2020. Taxpayers voluntarily returned 65,447 stimulus payments totaling more than $80 million as of Oct. 1, 2020.
Many ineligible payments went to deceased individuals. Congress and the IRS made several changes in terms of the eligibility of widows and widowers to receive payments on behalf of deceased spouses which made the rules confusing for taxpayers. Consequently, the IRS updated the EIP FAQs on its website with new guidance concerning payments that were issued to deceased individuals.
The IRS informed many taxpayers who received the payments for an individual who died before the receipt of the payment that the payment should be returned to the IRS. Additionally, the IRS included steps that should be taken to return these payments as part of its FAQs.
Ineligible payments also went to individuals with filing status changes, ineligible dependents, nonresidents, and individuals in U. S. territories who have already received payments from the territories.
The IRS has added instructions to its website to provide information about stimulus ineligibility and the need to return the payments. It also provides information about the process for returning the stimulus.
If you believe that you may have received stimulus that you weren’t eligible for, the IRS website will provide answers and instructions to help you resolve issues that you may have.
David Zubler is a tax accountant and Enrolled Agent representing clients before the IRS with over 25 years of tax experience. He is the author of four tax books and is the founder and president of Your Tax Care. The company provides business and tax education to the public at its website, YourTaxCare.com. David can also be contacted by email at firstname.lastname@example.org