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After accidentally sending millions of stimulus checks to ineligible foreign citizens living overseas, the IRS is now asking some foreign banks to help it recover that money, creating a legal mess.
NOEL KING, HOST:
When the U.S. government sent out stimulus payments during the pandemic, it made a mistake. It sent more than a billion dollars to dead people and to citizens of other countries who are not eligible for the money. Sacha Pfeiffer of NPR’s Investigations team has learned the IRS is trying to get some of that money back, and it is causing legal mayhem overseas.
SACHA PFEIFFER, BYLINE: Craig Reffner is a lawyer who, about 25 years ago, moved from the United States to Micronesia in the Pacific Ocean, but he’s kept his U.S. citizenship and files U.S. taxes, which makes him eligible for stimulus payments. He put his first one for $1,200 in his account at the Bank of Guam.
CRAIG REFFNER: And I deposited it, and there was no question – wasn’t a problem at all.
PFEIFFER: When his second check arrived for $600, he did the same thing.
REFFNER: And then later that night, I looked at my account, and I noticed that it had a huge negative transaction, and I was like, what in the world could have happened?
PFEIFFER: What happened is the Bank of Guam put a hold on Reffner’s check. It also froze stimulus checks deposited by other customers. It did that after the U.S. Treasury sent the bank a letter obtained by NPR asking for help recovering tax payments the IRS had issued in error. The bank eventually gave Reffner back his money, but others never got their checks back because the bank returned the money to the IRS. Dozens of customers in Micronesia are now suing the Bank of Guam.
CODY SPENCE: Two national police officers arrived at my workplace requesting to speak to me.
PFEIFFER: That’s Cody Spence. He’s a U.S. citizen, U.S. military veteran and U.S. tax filer living in Micronesia. He says those two Micronesian officers questioned him about the stimulus money he and his family received, and he said when his first check arrived, the Bank of Guam asked to see his U.S. passport before releasing the money. Spence said those experiences made him feel…
SPENCE: Uncomfortable considering it was a foreign government questioning me on how I received my money from my government.
PFEIFFER: Other customers said the Bank of Guam began seizing any checks issued by the U.S. Treasury. One Micronesian citizen told NPR a paycheck she received from the U.S. Justice Department was withheld by the bank.
ENDA KELLEHER: I don’t think that that is the business that they’re in.
PFEIFFER: Enda Kelleher is a vice president at Sprintax, which does U.S. tax prep for nonresidents. He said it isn’t the role or expertise of an overseas bank to determine whether economic impact payments were issued correctly.
KELLEHER: And I don’t think it would be appropriate for them to be establishing residency and establishing eligibility for the stimulus check.
PFEIFFER: The Bank of Guam said it would not comment because the matter is in litigation, but in court records and emails reviewed by NPR, bank officials said some customers received stimulus they weren’t eligible for, and the bank is required by U.S. law to return the money. The bank’s customers argue the IRS has no legal jurisdiction over the bank. In the meantime, the IRS is still repeating the error that led to the lawsuits in Micronesia.
SUZANNE WIGFORSS: So far, I received one check for $600 and one for $1,200.
PFEIFFER: Suzanne Wigforss is a Swedish citizen living in Stockholm who’s received two rounds of stimulus even though she is not eligible for it.
WIGFORSS: And then I received a letter now that another check is on its way for $1,400.
PFEIFFER: Wigforss worked in California years ago, which makes her eligible for Social Security but not stimulus. Her first two checks were signed by Donald Trump, and after the media reported the mistake, she assumed the IRS would correct the problem until she got that third notification.
WIGFORSS: When the mail came and I saw there was a letter from IRS, I said out loud, they couldn’t possibly do this again. But when I opened the letter, there it was, signed by Joseph Biden, White House. I was stunned.
PFEIFFER: For Craig Reffner, whose stimulus check was withheld for weeks by the Bank of Guam, it’s absurd the United States keeps issuing stimulus in error while simultaneously trying to recover stimulus it issued in error.
REFFNER: I don’t understand why President Biden would even allow the IRS to continue operating making mistake after mistake after mistake. I mean, that’s just a ridiculous way to operate.
PFEIFFER: An IRS spokeswoman told NPR she wasn’t aware of the Bank of Guam lawsuits or the IRS letter asking the bank for help. She did not say how many other banks may have received a similar letter, but she said the IRS works with financial institutions around the world to investigate suspicious tax activities, and the IRS continues to ask people who mistakenly receive stimulus checks to voluntarily return them. Sacha Pfeiffer, NPR News.
(SOUNDBITE OF BERRY WEIGHT’S “YETI’S LAMENT”)
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