In June 2020, the Government Accountability Office (GAO) released a report examining the implementation of the stimulus rollout. It found that while the IRS typically utilizes the full DMF to prevent fraudulent tax claims, this resource was not employed to block payments to deceased individuals during the initial three batches of stimulus disbursements. Consequently, over 1.15 million payments, amounting to $1.6 billion, were issued to those who had already passed away.
The report cited two primary reasons for this oversight:
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Legal Constraints
IRS legal counsel indicated that the IRS lacked the authority to deny payments to individuals who filed tax returns in 2018 and 2019, even if they were deceased at the time of payment. Therefore, the DMF was not leveraged for the first three batches, resulting in significant erroneous payments. -
Access Limitations
The GAO highlighted that while the IRS has full access to the DMF, the Treasury Department and its Bureau of Fiscal Services (BFS) only had access to an abbreviated version, which is approximately 60% complete. Following a revised legal interpretation, the IRS granted BFS temporary access to the complete DMF to filter out deceased individuals from future payments.
Congressional Scrutiny of the DMF
Following the issuance of incorrect payments to deceased individuals, a bipartisan group of lawmakers inquired about the access of various agencies to the SSA's Death Master Files before distributing stimulus payments. They directed questions to the Treasury Department, IRS, and SSA, seeking clarification on the databases used for verifying eligibility.
The GAO report suggested that Congress should amend the Social Security Act to grant the Treasury Department ongoing access to the full DMF to prevent future payments to deceased individuals and ineligible recipients.
What Is the Death Master File?
The Death Master File (DMF) is a comprehensive database managed by the SSA, containing records of individuals who died while possessing a Social Security number. It is an essential tool for various entities, including financial institutions, insurance companies, and government agencies, helping to verify deaths and prevent fraud.
The DMF comprises vital information such as names, Social Security numbers, dates of birth, and dates of death. While primarily used for legitimate purposes, the DMF has faced scrutiny due to identity theft and privacy concerns. To mitigate risks, the SSA has implemented measures to restrict access to the DMF and safeguard against unauthorized use.
DMF Access and Versions
The DMF is compiled by the SSA and made available through the National Technical Information Service (NTIS). It is also referred to as the Social Security Death Index (SSDI) and includes records dating back to 1936. With over 83 million records, the DMF is a key resource for identifying deceased individuals, although it may not provide a complete or current list of all deaths in the U.S.
Access to the DMF is tiered, consisting of two main versions
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Full DMF
Contains complete death records from both the SSA's Numident database and state death data. Access is limited to certain federal and state agencies, requiring justification of legal authority and safeguards for sensitive data. -
Limited Access Death Master File (LADMF)
Publicly available, this version includes only records from Numident and is accessible to certified subscribers like banks and healthcare entities. Its primary purpose is to help prevent identity fraud.
Uses of the DMF in Healthcare and Other Industries
The DMF serves critical functions across various sectors. In healthcare, it aids researchers in tracking patient outcomes, helps compliance professionals verify provider identities, and is instrumental in preventing identity fraud in medical practices.
In other industries, organizations may consult the DMF to ensure that provided Social Security numbers are not linked to deceased individuals. For instance, banks check against the DMF to confirm loan applicants' identities, while government agencies use it to terminate benefits for deceased recipients.
A Brief History of Changes to the DMF
Significant changes to the DMF have occurred over the past decade:
- 2011: The SSA adjusted its processes regarding death data, removing approximately 4.2 million records based on state data due to confidentiality concerns. This led to the creation of two DMF versions: a public and a complete version.
- 2014: Access to the DMF was restricted to organizations demonstrating robust data security measures and legitimate purposes for use.
- 2021: The Consolidated Appropriations Act allowed the SSA to share state-reported death data with the Treasury Department, enhancing verification capabilities.
Conclusion
In light of the 2020 stimulus payments sent to deceased recipients, the IRS is now requesting these funds be returned. Recipients are advised to void checks or issue repayments for direct deposits. However, the IRS lacks a systematic plan to inform ineligible recipients on how to return the payments.
Despite its complexities and evolving data sources, the DMF remains a critical resource for verifying death records. As state data increasingly supplements SSA’s information, the public file may yield fewer new death reports, potentially diminishing its utility for fraud prevention and identity verification.
For organizations seeking expert guidance in navigating the complexities of the Death Master File, NDB is North America's leading provider of DMF audits and advisory services. To learn more, contact Christopher Nickell at This email address is being protected from spambots. You need JavaScript enabled to view it. or at 850-295-0808.