Treasury has screened more than 885 million federal payments against Social Security death records—and returned nearly $99 million for review. Here is how the process may affect tax refunds, surviving spouses, estates and business owners after a death.
Deceased Taxpayer Refunds Form 1310 & Form 56 Estate EIN Business Succession Do Not Pay System
A family can do everything correctly and still have a federal payment delayed after someone dies. The final tax return may be accurate. The refund may be legitimate. The surviving spouse may be legally entitled to receive it. But Treasury’s systems may stop the payment anyway—and resolving the delay requires knowing exactly what to do next.
On July 21, 2026, the U.S. Department of the Treasury announced that it had screened more than 885 million federal payments totaling approximately $2.77 trillion against Social Security death records. The process identified more than 4,900 payments worth approximately $99 million associated with deceased payees. Those payments were returned to their originating federal agencies for review before being released.
After someone dies, it is not enough for a payment to be valid. Government records must also clearly establish who is legally authorized to receive it—and that often requires documentation most families have not yet assembled.
What Treasury’s screening process actually does
Treasury operates a payment-integrity program called Do Not Pay. Federal agencies use the system to identify potential problems before government money is released—flagging deceased recipients, eligibility concerns, identity issues and data inconsistencies.
The latest process compares proposed federal payments with death information maintained by the Social Security Administration. When a match is found, the payment is returned to the originating agency. That agency must then decide whether to cancel, correct, redirect, reissue or release the payment after receiving additional documentation.
Importantly, Treasury stated that the 4,900 payments were associated with deceased payees and returned for review—not that every payment was fraudulent.
The $99 million does not automatically represent fraud
A payment linked to a deceased person can be improper, but it can also be entirely legitimate. The stopped payments may include:
Final tax refunds
A refund from the deceased taxpayer’s final income-tax return or a joint return filed with a surviving spouse.
Estate payments
Money legally payable to the deceased person’s estate, or a federal payment authorized before death but issued afterward.
Business payments
A payment owed to a business whose owner recently died, where authority and banking access have not yet been transferred.
Record errors
A living taxpayer who was incorrectly reported as deceased in the Social Security Administration’s death records.
The system identifies a possible issue—it does not, by itself, determine whether the family committed fraud or whether the payment must be permanently denied. Resolving the hold may require tax returns, court documents, fiduciary notices, estate records and updated banking information.
A practical example: a valid refund that gets delayed
Assume a married taxpayer dies in March. The surviving spouse files a valid joint return for the year of death showing a $6,800 refund from withholding and estimated payments made before the spouse died. Nothing about the refund is fraudulent.
However, Treasury’s system detects that one Social Security number on the return belongs to a deceased taxpayer. The refund is stopped and returned to the IRS for review. The IRS may then need to confirm:
| Question the IRS May Review | Why It Matters |
|---|---|
| Was the surviving spouse legally permitted to file jointly? | Joint filing eligibility ends if the survivor remarried before year-end. |
| Is the correct date of death reported? | Determines which income belongs on the final Form 1040 vs. Form 1041. |
| Does the refund belong to the surviving spouse or estate? | Affects who can legally receive and retain the payment. |
| Is the direct-deposit account still open and properly titled? | A closed or retitled account may prevent deposit or trigger a return. |
| Is Form 1310 required? | Missing or incorrectly filed Form 1310 can route a return to manual processing. |
| Has a court-appointed representative been established? | Determines which documentation the IRS needs before releasing the refund. |
The family may eventually receive the full refund. The delay can still create a real cash-flow problem—especially when the surviving spouse is paying funeral expenses, legal fees, medical bills and household costs previously covered by two incomes.
Why Treasury now has greater access to death records
Treasury’s expanded screening relies partly on access to the Social Security Administration’s Full Death Master File. A temporary data-sharing pilot was authorized through the Consolidated Appropriations Act of 2021. On February 10, 2026, the President signed the Ending Improper Payments to Deceased People Act, making that authority permanent. The statutory amendments take effect December 27, 2026.
The law also addresses erroneous death reports. It requires clear and convincing evidence before the Social Security Administration records a person as presumed deceased for data-sharing purposes, and requires notification to participating agencies when an erroneous death record is corrected. An incorrect death indicator can affect far more than a single government payment.
What surviving spouses should review
A surviving spouse may be able to file a joint federal income-tax return for the year in which their spouse died, provided applicable requirements are met. Before filing, review:
- Whether the final return will be joint or separate
- Income received before the date of death
- Estimated tax payments made under either spouse’s Social Security number
- Federal and state withholding
- Refund and direct-deposit instructions
- Ownership of the bank account receiving the refund
- Prior-year returns that remain unfiled
- Federal benefits received after the date of death
- Whether the surviving spouse remarried before year-end
Is Form 1310 always required?
No. Form 1310 is used to claim a refund on behalf of a deceased taxpayer, but exceptions apply. A surviving spouse filing a joint original or amended return generally does not need to attach it. A court-appointed personal representative may also avoid the form when the appropriate court certificate is attached. A representative who is not court-appointed may need to include it.
These distinctions are easy to overlook. The Taxpayer Advocate Service has previously reported substantial delays involving deceased-taxpayer refunds when paper Forms 1310 were separated from returns and not properly processed.
What executors and personal representatives need to do
The executor, administrator or personal representative becomes responsible for organizing the deceased person’s tax affairs. That responsibility may include filing the final return, prior-year returns, paying outstanding taxes, claiming refunds, obtaining an EIN for the estate, filing Form 1041, responding to IRS notices and coordinating with beneficiaries. IRS Publication 559 is specifically designed for survivors, executors and administrators.
Establish legal authority first
Being a family member does not automatically authorize someone to act for the estate. The person communicating with the IRS, bank or federal agency may need to provide Letters Testamentary, Letters of Administration, a court certificate, trust documentation, a will, a death certificate or other evidence of fiduciary authority.
File Form 56 when required
Form 56 notifies the IRS that a fiduciary relationship has been created or terminated. It is not a power of attorney—Form 2848 is used for an authorized representative, while Forms 8822 or 8822-B are used for address or responsible-party changes. An executor administering both the deceased person’s individual tax affairs and the separate estate may need separate Forms 56 for each.
Obtain an EIN for the estate
An estate is a separate taxable entity. It generally needs its own Employer Identification Number when it receives income, opens a bank account, operates a business or files Form 1041. An estate generally must file Form 1041 when its assets generate more than $600 of annual income. Income earned after death belongs on the estate’s return—not the deceased taxpayer’s final Form 1040.
Do not automatically spend a federal payment received after death
A deposit in a bank account does not prove the estate or family is legally entitled to retain it. Before using the money, identify which agency authorized the payment, which period it covers, why it was issued, who is legally entitled to receive it and whether the agency requires it to be returned or reissued.
Federal benefit payments may be subject to post-death reclamation rules. Treasury guidance distinguishes tax refunds from recurring federal benefits such as Social Security, which can create separate obligations for financial institutions and recipients who retain funds that should have been returned.
When a business owner dies
The death of a business owner creates added complexity because the business may continue operating while legal authority is being transferred. Payroll, rent, insurance, vendor invoices and customer obligations do not pause for probate. The succession team should quickly determine:
Legal control
Who owns or controls the business interest, and whether the operating or shareholder agreement addresses death and succession.
Banking access
Who can legally access business bank accounts, approve payments and continue payroll without interruption.
Federal payments
Whether the company is expecting a tax refund, government grant or federal payment that may be held pending an authority update.
IRS responsible party
Form 8822-B must be filed to update the responsible party within 60 days—a pending federal payment becomes harder to resolve when the deceased owner remains on record.
Why this matters for yacht- and asset-owning entities
A yacht, aircraft, rental property or other substantial asset is frequently held through an LLC, corporation, partnership or trust. When the sole member, beneficial owner, trustee or authorized signer dies, significant expenses continue—crew wages, dockage, insurance, maintenance, management fees, fuel, loan payments and charter commissions—while ownership and authority remain unresolved.
The estate, attorney, accountant and management team should determine who controls the entity, who can authorize payments, whether charter income should continue to the same account, whether insurance or vessel-registration records require updates and how personal, estate and business expenses will be separated. A refund delay may be only one symptom of a larger succession problem.
What if a living person is incorrectly listed as deceased?
A living person incorrectly listed as deceased may face interrupted benefits, delayed refunds and difficulty proving their identity to government agencies or private institutions. The Social Security Administration instructs affected individuals to visit a local Social Security office as soon as possible with an original, current identity document. Once corrected, Social Security may provide written confirmation for use with other agencies.
An incorrect death report must be corrected at its source. Resolving the issue with one bank or one agency may not fix the underlying Social Security record that other systems continue to use.
Five mistakes families should avoid
- Continuing to use the deceased person’s login credentials. Being a spouse, child or business partner does not authorize continued use of the deceased person’s tax, banking, payroll or government accounts. Obtain properly authorized access instead.
- Spending a post-death payment immediately. First determine what the payment represents and whether it must be returned, redirected or reissued before using any of the funds.
- Closing every account too quickly. Closing a joint or business account prematurely can cause legitimate refunds, customer payments and necessary automatic payments to fail. Coordinate the sequence with the bank, executor, attorney and tax professional.
- Assuming probate documents update every system. A court appointment does not automatically update the IRS, Social Security Administration, bank, payroll company, Secretary of State or federal payment agency. Each record may require a separate filing or notification.
- Mixing estate, personal and business money. Combining funds can make tax reporting, beneficiary accounting and business administration substantially more difficult. Maintain separate records and accounts from the start.
During the first several days
- Obtain certified copies of the death certificate
- Secure personal and business records
- Identify the will, trust and estate attorney
- Determine who has immediate legal authority
- Notify Social Security and relevant benefit agencies
- Review recent federal deposits
- Avoid spending unexplained post-death payments
During the first several weeks
- Obtain court appointment documents when probate is required
- Apply for an estate EIN when necessary
- Open an estate bank account when appropriate
- Identify pending tax refunds and federal payments
- Review prior-year tax filings
- File Form 56 when required
- Update business bank signers
- Restore payroll and accounting access through authorized users
- Update the business responsible party using Form 8822-B
- Separate estate and business transactions
Before filing the final returns
- Gather Forms W-2, 1099 and K-1
- Confirm estimated tax payments
- Identify income received before and after death
- Determine whether the final return will be joint or separate
- Evaluate whether Form 1310 is required
- Determine whether the estate must file Form 1041
- Review state income-tax and estate-tax obligations
- Confirm the correct mailing address and refund instructions
- Retain documentation supporting fiduciary authority
Navigating taxes and payments after a death?
McGregor Financial Services can help surviving spouses, executors, trustees and business owners organize the tax and accounting aspects of a post-death financial transition—including final returns, estate filings, IRS representation and business succession accounting.
Sources: U.S. Department of the Treasury, July 21, 2026 payment-verification announcement. Ending Improper Payments to Deceased People Act, Public Law 119-77. IRS Publication 559 and deceased-taxpayer resources. IRS instructions for Form 56. IRS and Taxpayer Advocate Service guidance on Form 1310. Social Security guidance for individuals incorrectly recorded as deceased.