Almost 645,000 people still hadn't gotten their third stimulus checks by last fall, Treasury says

Almost 645,000 people who were eligible for the third round of stimulus checks hadn’t gotten their payments as of mid-September, according to a U.S. Department of the Treasury report published Thursday.

The American Rescue Plan authorized the federal government to send up to $1,400 to each person who qualified, starting in March 2021. It was the third and final tranche of federal stimulus funds authorized by Congress during the Covid-19 pandemic.

The money was technically an advance payment of a tax credit, the Recovery Rebate Credit, that households can claim on their 2021 income tax return.

The IRS had correctly issued payments to nearly 167 million people as of Sept. 16, 2021 — almost 99.5% of the total, according to the report, published by the Treasury Inspector General for Tax Administration, a watchdog housed within the Treasury Department.

More from Personal Finance:
7 things to know about the SEC climate rule
Here’s the average tax refund so far this year
How to avoid a 6-figure tax penalty on foreign bank accounts

However, the Treasury identified 644,705 people who hadn’t gotten a payment within that timeframe, the report said. Their missing funds totaled $1.6 billion.

An additional 294,000 people had been issued stimulus payments by the federal government but the arrival of those payments was somehow delayed or the funds hadn’t yet been accessed, the report said.

The number of people affected who’ve gotten a payment since mid-September is unclear. An IRS spokesperson wasn’t able to elaborate on the contents of the report by press time. The report data suggests many of them have gotten their funds or that the IRS is evaluating the payments.

Further, more than 1.2 million total payments issued ($1.9 billion) were to people who likely shouldn’t have gotten the money, the report said. They included ineligible dependents, non-U.S. residents and duplicate payments made to households who changed their tax-filing status, for example.

“Delivering these payments was no small undertaking,” Kenneth Corbin, commissioner of the IRS wage and investment division, wrote in a response attached to the Treasury report.

“Employees in various IRS offices collaborated to improve delivery of payments each of the three times Congress passed stimulus legislation, so that by the third round, checks started going out the very next day providing immediate help to people across the country,” he added.

Americans who didn’t receive stimulus funds include many with eligible dependents. Some recipients of unemployment benefits should also have been eligible for a check after the IRS applied a new tax break, the report said. (That tax break effectively reduced their income below the necessary threshold to get a stimulus check.)

However, it’s likely that many of these individuals have gotten their stimulus funds since the middle of September.

For example, there were almost 420,000 people who hadn’t received a $1,400 check for an eligible dependent as of April 1, 2021, which the IRS acknowledged was due to a programming error. But the agency fixed the error by April 22, and 99.5% were being “considered” for a payment as of September, according to the report. An agency spokesperson wasn’t able to elaborate on the status of those payments by press time.

The Treasury watchdog also recommended the IRS issue payments to qualifying recipients of unemployment benefits, but IRS management disagreed, the report said. These taxpayers must claim the 2021 Recovery Rebate Credit on their 2021 income tax returns. Tax season ends for most filers on April 18 this year.