Are You Mistakenly Dead to the IRS?

The IRS incorrectly locked thousands of taxpayer accounts because the agency thought the taxpayers had died. A recent report from the Treasury Inspector General for Tax Administration (TIGTA) found that over 90,000 accounts were "deceased locked” last year despite the taxpayers being alive.

Typically, the IRS locks accounts of taxpayers who have passed away to prevent fraudulent use of the deceased person’s information. When your account is locked by the IRS because you have been marked deceased, you can't file tax returns or receive tax refunds.

The IRS confirmed that many of the "taxpayer accounts were locked in error due to both human and computer programming issues when identifying the appropriate taxpayer accounts to be locked,” the report states.

From just $107.88 $24.99 for Kiplinger Personal Finance

Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues

CLICK FOR FREE ISSUE

Sign up for Kiplinger’s Free Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

IRS mistakenly ‘deceased locked’ taxpayer accounts

The TIGTA looked at taxpayer account information from January 1, 2022, and found that the IRS locked close to 78,000 taxpayers' accounts due to mistakenly being deemed deceased by the agency. 

According to the report, “In these instances, the Social Security Administration’s (SSA) data didn't indicate that the taxpayer was deceased, i.e., there was no date of death present.”

TIGTA also found that through October of 2022, the IRS continued to decease lock accounts for taxpayers who weren’t dead. From January to October of last year, data showed the agency erroneously locked an additional 14,193 taxpayer accounts. 

At the beginning of 2023, the IRS worked to reconcile some of its records with information from the SSA. According to the TIGTA, about seventy percent of accounts reconciled in that process were improperly issued an IRS CP01H notice.

What is a CPO1H Notice?

• A CP01H notice is a letter issued by the IRS when the agency receives a tax return that contains a Social Security number (SSN) for a locked account. 
• The IRS usually locks accounts because the taxpayer identification number (TIN) on the tax return belongs to someone who the IRS believes died before the tax year of the return. Sometimes, the account is locked by the IRS due to identity theft.
• But as the TIGTA report found, thousands of taxpayers received CP01H notices in error.

To help the IRS resolve the problem, the TIGTA made several recommendations. (Those mainly involved reviewing affected taxpayer accounts and taking action to remove erroneous locks.) However, another TIGTA recommendation was that the IRS update its CP01H notice to state that taxpayers can work with the agency to resolve the mistaken deceased locks. 

According to the report, the IRS argued that the CP01H letter already directs taxpayers to resolve account lock issues with the SSA. However, TIGTA believes that the IRS should “clarify the notice so taxpayers are aware they can work directly with the IRS to correct the erroneous deceased account locks.”

What to do if the IRS thinks you’re deceased 

If you receive an incorrect CP01H notice, the IRS says you should contact the Social Security Administration to resolve the situation. After the SSA corrects the information, the IRS says you can file your return by following the instructions on the notice. That process involves providing the following information. 

• A copy of the CP01H notice
• A written request to unlock the account
• A photocopy of your passport, driver’s license, Social Security card, or other valid U.S. federal or state government-issued identification
• Your federal tax return with original signatures

The IRS also suggests you double-check that the information provided on your tax return is correct — mainly, your Social Security number. 

Related

• The Most Expensive States to Die In (Due to Death Taxes)
• The Problem With Claiming the Employee Retention Credit (ERC)
• Filing a Deceased Person's Final Income Tax Return