By Matthew Kuster ’22
In March, the United States Congress passed a relief package plan worth $2.2 trillion to mitigate COVID-19’s devastating economic impact. The Coronavirus Aid, Relief, and Economic Security (CARES) Act included a $300 billion directive to distribute stimulus checks to over 160 million American households. Individuals with an adjusted gross income (AGI) below $99,000 received stimulus checks from the federal government of up to $1,200. For those with over $75,000 in AGI, checks were reduced $5 for every $100 over $75,000. Income thresholds were doubled for couples, and for each child below age 17, an additional $500 was granted.
In the rapid distribution of stimulus checks, the government encountered several problems. First, according to a report from the Government Accountability Office (GAO), over 1.1 million stimulus checks were erroneously sent to deceased Americans. Because these checks relied on tax returns from 2018 or 2019, an estimated $1.6 billion in stimulus checks was sent to people who filed those taxes but have since died. Although the Internal Revenue Service (IRS) has access to Social Security death data, the Treasury Department’s Bureau of the Fiscal Service initially did not have access to this data. The IRS reportedly implemented a procedure in 2013 to use death records to prevent improper payments; however, in their haste to distribute checks in spring, Treasury followed procedures used during the 2008-2009 recession that did not filter using death data. In June, to prevent further misdirected payments, the Senate passed a bill that explicitly allowed the Social Security Administration to share complete death data with the Treasury Department. By the end of August, the Trump administration claimed that 70 percent of the money sent to decedents had been returned and recovered. The GAO has yet to verify the number of payments returned.
Additionally, thousands of stimulus checks were erroneously sent to non-US citizens living overseas. Some foreign workers who were on temporary US work visas in the last two years incorrectly filed IRS 1040 tax forms instead of non-resident 1040-NR forms, causing them to appear as US residents or citizens. The error is common for those with F-1 student and J-1 exchange visas, and the likelihood that these workers would mistakenly receive stimulus checks was increased if they had a Social Security number, US address, or bank account on file with the IRS. Foreign workers in at least 129 different countries ended up receiving checks, and while the IRS has called for them to be returned, some workers had rushed to spend the money in their home countries, especially with the Trump Administration’s freeze on foreign work visas preventing seasonal workers from returning to the US. Others attempted to return the checks or have taken steps to ensure that their immigration status will not be hurt by receiving the payment.
While stimulus checks were sent to thousands of foreign workers and millions of dead people, millions of living US citizens were left waiting several months before receiving their stimulus checks. In early June, 30 million to 35 million eligible Americans were still waiting for their stimulus checks. This included citizens who had filed their tax returns or received benefits from Social Security, Railroad Retirement, Supplemental Security Income, or Veterans Administration. It also included an estimated 10.7 million people who do not file tax returns or receive benefits from the federal government. Various glitches and programming errors also stalled the distribution of checks to some families and initially sent payments that neglected the $500 amount for qualifying children.
The stimulus check program provided a lifeline to millions of households across the country, but some Americans were still waiting for their first stimulus checks to arrive even as Congress began debating on a second wave of stimulus checks late in the summer.