By David van den Berg

Law360 (July 8, 2020, 6:16 PM EDT) -- The Internal Revenue Service correctly computed about 98% of economic impact payment amounts, but some dead people and prisoners got money, some people got two payments, and others who should've gotten payments didn't, according to a watchdog report released Wednesday.

The IRS sent 1.2 million payments to dead or imprisoned people as of May 21, according to the report by the Treasury Inspector General for Tax Administration. The report also noted that the Bureau of the Fiscal Service, which sends payments on behalf of the IRS, had incorrectly stopped payments to the spouses of dead or imprisoned people who were entitled to them. The IRS is working to send affected spouses their portion of the impact payment where appropriate, the report said.

The report also said that as of May 21, 46,759 people got two payments, with a total of more than $69 million in erroneous payments. The agency is asking taxpayers to voluntarily return them, according to the report.

The IRS told Law360 in response to TIGTA's report that during the pandemic, it has processed more than 126 million returns and more than 93 million refunds totaling over $257 billion. The agency also said it coordinated delivery of more than 160 million economic payments totaling over $270 billion "in record time" and that more than 30 million of the payments went to people who aren't ordinarily required to file returns.

"Going forward, we continue to be focused on resolving any remaining issues involving Economic Impact Payments," the agency said. "We continue to ask partner groups and others to help us identify eligible individuals, particularly in historically underserved communities, so that we can deliver their payments."

TIGTA said in the interim report on the filing season that this season is "unlike any other" because of the novel coronavirus pandemic. The report covered the payments, advance tax credits for employers in virus relief bills and the limited agency operations resulting from the pandemic.

In addition to erroneous payments, the report addressed the issue of people who should have received payments but didn't. They include more than 1 million people who receive Social Security payments, Social Security Supplemental Income payments and veterans benefits, but don't have a filing requirement. The IRS has direct deposit information for 585,329 of these people, according to the report.

TIGTA said the IRS indicated there are "conditions associated" with some of the cases that will take additional time to resolve before eligibility for the payments can be determined and the money sent.

The Coronavirus Aid, Relief and Economic Security Act , which President Donald Trump signed into law in March, required the payments to be sent. The IRS started delivering the first round of payments much faster after the law's enactment than with a similar payment program called for in the Economic Stimulus Act of 2008 , according to a Congressional Research Service report also released Wednesday.

It took the IRS about 10 weeks after the 2008 law's enactment to start distributing payments, the report said. What's more, the agency's workforce is 20% smaller now than it was when it distributed the 2008 payments, it said.

As the IRS works to resolve lingering issues with the virus payments, the agency's accounts management function employees are working to clear the unit's extensive backlog, according to TIGTA's report.

The IRS' accounts management function helps taxpayers with questions about tax laws, their account, the status of their refunds, and adjusts their account when needed. The accounts management unit had an inventory of 2.6 million cases to work as of May 16, according to TIGTA. Based on staffing and IRS reports as of that date, the function is closing about 119,000 cases a week and it will take an estimated 33 weeks for the function to be in a position to clear its backlog, apart from new receipts, TIGTA said.

There were 17,534 employees working in accounts management as of March 14, according to the IRS, while by comparison only 5,562 accounts management employees were either teleworking or reporting to an office as of May 16, TIGTA said.

IRS Commissioner Chuck Rettig said in an internal email to IRS employees last month that all agency facilities that hadn't already reopened would do so on July 13 for workers whose jobs can't be done remotely.

--Additional reporting by Stephen Cooper and Amy Lee Rosen. Editing by Joyce Laskowski. 

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