PROMO Finance - Money Cash Bills - iStock - alfexe

Through CARES Act, Treasury Department sent nearly $1.4 billion to dead people

© iStock - alfexe
Bethany Blankley | The Center Square

(The Center Square) – A report published by the Government Accountability Office analyzed how much the federal government has spent so far in response to the national public health and economic threats caused by COVID-19 through relief laws enacted as of June 2020. It also identified examples of waste, fraud and abuse as well as areas in need of immediate correction.

Of utmost concern, the GAO notes, is that the U.S. Treasury Department sent nearly $1.4 billion to dead people through CARES Act funding. Additionally, there is no way to determine if people filing for unemployment insurance benefits are also receiving funding through the Paycheck Protection Program.

The GAO analyzed how the federal government appropriated $2.6 trillion through four federal laws. Six areas of these laws account for 86 percent of the appropriations: the Paycheck Protection Program (PPP); Economic Stabilization and Assistance to Distressed Sectors; unemployment insurance; economic impact payments; Public Health and Social Services Emergency Fund; and Coronavirus Relief Fund.

“In the absence of comprehensive data, GAO collected obligation and expenditure data from agencies, to the extent practicable, as of May 31,” the report states. “For the six largest spending areas, GAO found obligations totaled $1.3 trillion and expenditures totaled $643 billion. The majority of the difference was due to the PPP, for which the Small Business Administration (SBA) obligated $521 billion.”

Of the economic impact payments, the Internal Revenue Service (IRS) and U.S. Treasury Department moved quickly to disburse 160.4 million payments totaling $269.3 billion to qualifying U.S. citizens. The IRS and Treasury Department, the GAO says, “faced difficulties delivering payments to some individuals, and faced additional risks related to making improper payments to ineligible individuals, such as decedents, and fraud.

“For example, according to the Treasury Inspector General for Tax Administration, as of April 30, almost 1.1 million payments totaling nearly $1.4 billion had gone to decedents,” GAO states. As a result, the GAO recommends that the IRS “should consider cost-effective options for notifying ineligible recipients how to return payments,” to which the IRS has agreed.

The report cites the Treasury Department’s lack of access to the Social Security Administration’s “Death Master File” as the primary reason for sending nearly $1.4 billion to dead people.

In response to the GAO findings, U.S. Reps. Ted Budd, R-NC, and John Curtis, R-UT, introduced the Stopping Payments to the Deceased Act. The bill would require the Social Security Administration (SSA) to share their death records with the Treasury Department.

“The American taxpayer should never be on the hook for clumsy federal decision making,” Curtis said in a statement. “We could have saved the American people more than $1 billion if we had done our homework. This common-sense legislation gives our federal agencies the requisite tools to sync their data systems on the front-end versus scrambling for solutions to avoidable problems on the back-end.”

Of the PPP payments, the SBA rapidly processed more than $512 billion in 4.6 million guaranteed loans through private lenders to small businesses and other organizations as of June 12. As of May 31, SBA had expended about $2 billion in lender fees.

GAO identified areas in need of immediate attention pertaining to PPP and unemployment claims (UI). The UI programs are generally intended to provide benefits to individuals who have lost their jobs, whereas the PPP requires employers to retain or rehire employees in order to receive full loan forgiveness.

To date, states have received more than 44 million unemployment claims. Additional funding has been processed through three new federally funded unemployment insurance programs created by the CARES Act, including the additional $600 per week in federal emergency payments.

According to the U.S. Department of Labor (DOL), “no mechanism currently exists that could capture information in real time about UI claimants who may receive wages paid from PPP loan proceeds.”

The GAO recommends that the DOL, in consultation with the SBA and the U.S. Treasury Department, “immediately provide information to state unemployment agencies that specifically addresses PPP loans, and the risk of improper payments associated with these loans.”

The DOL has taken steps to help states manage the demand for UI benefits, and is also developing its approach to overseeing the new UI programs, GAO notes. The federal labor agency neither agreed nor disagreed with the GAO’s recommendation, the report states, but said new guidance was forthcoming.

The GAO says it also will be evaluating DOL’s monitoring efforts and reporting on them in future reports.