Does the IRS think you are DEAD? Taxman falsely locked 90,000 accounts ‘deceased’ despite petitioners still alive

More than 90,000 taxpayers have had their IRS accounts blocked because the government agency mistakenly believed they were dead, a new watchdog report says.

The blunder — which the IRS blamed on “human and computer programming problems” — has left legitimate and living citizens unable to file taxes and receive rebates. They were then also lumped in with the burden of solving the problem.

The Inspector General of the Tax and Customs Administration (TIGTA) issued a report last week it claimed it had identified 77,868 accounts with potentially faulty locks before January 2022 and another 20,222 over the next ten months.

The IRS has since confirmed that those affected can notify the service and file new returns once their accounts are unlocked.

IRS Commissioner Danny Werfel speaks at a Senate Finance Committee hearing in Washington in April. His agency acknowledged that the taxpayer’s accounts were “inappropriately locked due to both human and computer programming problems”

The IRS usually locks accounts when a person dies to prevent the filing of fraudulent returns or identity theft. To identify who has died, the agency primarily relies on updates from the Social Security Administration (SSA).

In the event that an account is locked, any attempt to file a tax return using that person’s taxpayer identification number (or social security number) will be rejected. The IRS will issue the so-called CP01H notice denying the application.

TIGTA’s investigation first started when a taxpayer informed him that he had not received proper tax relief during the Covid-19 pandemic.

Beginning in 2023, the IRS began trying to match its records with information from the SSA. According to TIGTA, about 70 percent of accounts were found to have incorrectly received the CP01H notice.

“At the start of the past decade, adversaries, lured by the increasing availability of refundable tax credits disbursed through the tax system and the use of the stolen identities of individual victims, exponentially increased the number of identity theft-related refund frauds,” Kenneth wrote. Corbin, the commissioner of the IRS’s payroll and investment division in response to the recent report.

Corbin noted that a new program was introduced in 2012 to minimize the payment of refunds for fraudulent claims.

He acknowledged that “mistakes can occur” and said the department had taken a number of steps to fix the faulty dead locks. According to TIGTA, the IRS agreed to six recommendations to prevent similar incidents in the future.

TIGTA’s investigation first started when a taxpayer informed him that he had not received proper tax relief during the Covid-19 pandemic. Pictured is a US Treasury check

A CP01H notice (pictured for tax year 2014) is a letter from the IRS when the agency receives a tax return with a Social Security number (SSN) for an escrow account

One of TIGTA’s key recommendations was that the IRS update its CP01H notice to give taxpayers the ability to appeal and resolve faulty dead locks.

The IRS responded that the notice already provides language for taxpayers to contact the IRS if help is needed.

Last week, a separate report from TIGDA found that tThe IRS lost track of millions of sensitive tax records putting taxpayers at risk of tax refund identity theft.

It said it found seven empty boxes at an IRS facility in Ogden, Utah, which are supposed to contain as many as 168 microfilm cartridges, containing up to 2,000 photographic images of records.

The IRS uses microfilm cartridges to store backup data of business and individual tax records, and is required by law to do so.