Here's What You Need to Remember: That represented a relatively small percentage of the total payments that went out.

The IRS released a report this week showing that there was likely some amount of fraud in the distribution of stimulus payments in last year’s CARES Act.

The report, from the Treasury Department’s Inspector General for Tax Administration, found that as of last July, 4.4 million Economic Impact Payments, at a value of more than $5.5 billion, went to those who were “potentially ineligible.”

“As of July 16, 2020, the IRS had issued more than 4.4 million EIPs totaling nearly $5.5 billion to potentially ineligible individuals. These payments include payments made to deceased individuals, potentially nonqualified dependents, nonresidents, individuals in U.S. Territories (who have also received payments from the Territories), and individuals with filing status changes,” the report said.

That represented a relatively small percentage of the total payments that went out.

According to Accounting Today, that led to new safeguards being put in place to stop fraud.

 “In response, the IRS developed specific filters to identify potentially fraudulent filings,” the Treasury report said. “Once a return was identified as potentially fraudulent, it was sent to an IRS team for review. As of Nov. 11, 2020, the IRS has identified 457,325 questionable tax returns associated with the EIP for review and determined that 38,273 returns were a fraudulent EIP claim.”

The Inspector-General made a pair of recommendations, described as “implementing a multipronged public awareness campaign to inform the public about the availability of the Recovery Rebate Credit related to individuals who died in Calendar Year 2020, and developing processes to identify and prevent the issuance of future EIPs to individuals who are ineligible based on applicable dependency requirements.”

However, per the report, the management of the IRS disagreed with those recommendations.

“Management believes a public awareness campaign is not warranted and its systems do not have the ability to look to outside data sources to identify and prevent the issuance of future EIPs to ineligible individuals based on applicable dependency requirements.”

“We disagree with the finding and related outcome measure that nearly 1.8 million payments attributable to dependents, totaling nearly $1.4 billion, were potentially erroneous,” Kenneth Corbin, commissioner of the IRS’s Wage and Investment Division said in response to the report, according to Accounting Today.

“The outcome measure includes almost 1.1 million payments for $553.6 million for dependents who were older than 16 years of age at the end of 2020 but were not older than 16 years during the respective tax year on which the EIPs were based.”

In May, a Massachusetts man pled guilty to the first-ever case of fraud related to the CARES Act.

The report was in reference to the CARES Act, and not to the American Rescue Plan, which was passed by Congress and signed by President Biden in March of 2021.

Stephen Silver, a technology writer for The National Interest, is a journalist, essayist and film critic, who is also a contributor to The Philadelphia Inquirer, Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.

This article appeared earlier and was reposted due to reader interest.

Image: Reuters