Watchdog’s Deceased Mother One of 1.1 Million to Get Stimulus Check

The head of a federal watchdog agency had some direct experience with the shortcomings of one of the coronavirus stimulus programs -- a check from the IRS made out to his late mother.

Gene Dodaro, comptroller general of the U.S. Government Accountability Office, told a congressional panel on Friday that the Internal Revenue Service sent his mother a $1,200 payment this spring, even though she died in February 2018.

“My sister got it; of course she returned it,” Dodaro said. “A lot of other people didn’t know” they’re supposed to return the money if they receive payments for a relative who’s died.

Dodaro’s experience was one of the issues the GAO highlighted in a report released on Thursday looking at the federal government’s response to the coronavirus pandemic. The report found that the IRS sent nearly $1.4 billion of payments to about 1.1 million deceased individuals in an effort to get the economic stimulus out as quickly as possible.

Dodaro recommended that the IRS look at ways to to contact people who received these payments to try to recoup the money. Congress in March approved $1,200 payments for many low- and middle-income adults, as well as additional $500 payouts for their children.

Thursday’s report said that the IRS and Treasury Department have since updated their databases to exclude those who’ve died from receiving payments, but Dodaro is recommending Congress pass a law that would allow the Social Security Administration and the IRS to more closely share data. Legislation to do that has been “introduced but is not over the goal line,” he said.

That would help the federal government more accurately target future stimulus payments as well as other benefits, he said. The issue could come up as soon as July, when Congress will begin debating another round of stimulus. House Democrats have pushed for more payments to households. President Donald Trump and Treasury Secretary Steven Mnuchin are also considering the idea.

The GAO has also made strides in getting the data it needs to review the Paycheck Protection Program. After the Small Business Administration initially wasn’t cooperating with the GAO’s requests for interviews and loan data, Dodaro said he spoke with SBA Administrator Jovita Carranza on Thursday night, and that she agreed to work with the GAO to provide data as well as design oversight and monitoring plans.

Thursday’s GAO report said there’s “a significant risk” of fraud with the forgivable PPP loan program because it had limited safeguards. Late and ever-changing guidance also increased the likelihood that borrowers may misuse loan proceeds or not qualify to have the full loan forgiven, the report said.

“They need an oversight plan to ensure that the funds are safeguarded,” Dodaro told lawmakers.

The GAO said that before releasing data, SBA wants to discuss how certain information will be restricted. The Trump administration plans to shield details that identify firms with loans of less than $150,000 because payroll information that the firms consider confidential is used to calculate loan amounts.

The administration said it will publicly release by the end of next week the company names and other data for all PPP loans of more than $150,000 and details about smaller loans excluding information identifying the firms.

The SBA and Treasury sent letters on Thursday to the Select Subcommittee and other panels saying it will give the committees access to all PPP loan data with the understanding personally identifiable information will be kept confidential.

Representative James Clyburn of South Carolina, chairman of the House Select Subcommittee on the Coronavirus Crisis, said in his opening statement he’s “pleased that the SBA is finally showing some willingness to obey the law,” but that “it is troubling that the administration withheld this information until the eve of a congressional hearing exposing their obstruction.”

The PPP has been a “smashing success” in saving small businesses, said Representative Steve Scalise of Louisiana, the top Republican on the panel. He said Congress demanded that SBA and Treasury stand up a program quickly to get relief to small firms, and that more companies would have failed had the administration taken months to engineer a “mistakes-free” program.

©2020 Bloomberg L.P.

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