Recovery Rebate Credit Payments Were Issued to 300,000 Ineligible Taxpayers

Report Information

Summary

Our review identified that 300,843 ineligible taxpayers received $447.8 million in erroneous RRC payments. In January 2025, we began alerting Taxpayer Services management of the erroneous payments. Taxpayer Services management stated that they were aware of the 225,028 erroneous payments issued to nonresident aliens. For the remaining 75,815 erroneous RRC payments, Taxpayer Services management stated that they resulted from incomplete data and other eligibility requirements that were not included in the analysis to determine who should receive the payments. The 300,843 taxpayers had the following characteristics that made them ineligible: Description Taxpayers Total of Payments Nonresident aliens, i.e., filed Form 1040-NR, U.S. Nonresident Alien Income Tax Return. 225,028 $317.1M Taxpayers who already received the EIP or RRC for Tax Year 2021. 68,071 $117.1M Individual Taxpayer Identification Number holders who did not claim a dependent with a valid Social Security Number for Tax Year 2021. 4,880 $7.5M U.S. Territory residents. 2,350 $5.1M Taxpayers whose adjusted gross income exceeded the income levels for Tax Year 2021. 514 $1.1M Total 300,843 $ 447.8M Totals may not add due to rounding. M = Million. Since these payments were issued through a one-time batch process, no computer programming changes are needed at this time. However, the IRS should consider our concerns if similar types of advanced payments are issued in the future. The IRS will issue a letter to the impacted taxpayers asking them to return the payment. The IRS will also use refund offsets to recover these erroneous payments. A refund offset means that when the taxpayer files their next individual tax return, the IRS will offset any refund due until the erroneous payment is recovered or the two-year recovery period has ended, whichever occurs first.