They used tax return filings for 2018 and 2019 to identify people qualifying for a payment. Given that around 2.3 million people die annually, there were undoubtedly quite a few people who filed returns in those periods but died post-filing. While the Social Security Admin has detail records on deaths, those records weren't available to the Treasury Dept/IRS. That was also the case when stimulus checks were distributed in 2008.
In a 2013 review of what happened in 2008, the GAO noted the issue and recommended that the pertinent records be shared in the event of a similar distribution. However, in their rush to make the 2020 payments, they did not take the time to do this. When the GAO recently took a look at the 2020 payments, I assume they were able to get the SSA records to run against the Treasury disbursement records: that allowed them to determine payments to the dead.
The Cares Act directed the stimulus payments to people who filed a 2018 or 2019 tax return. The payments went to people making up to $99,000 annually. According to the GAO, IRS officials raised questions with Treasury as the Cares Act was being drafted about the possibility that payments could go to people who filed tax returns but subsequently died. However, IRS counsel determined they did not have the legal authority to deny payments to people who had filed a return, even if they were deceased at the time of payment.
Also, Treasury officials noted that the Cares Act mandated delivery of the economic impact payments “as rapidly as possible.” To fulfill this mandate, they used procedures that had been put in place for stimulus payments issued in 2008, and as a result did not use death records as a filter. The GAO noted that in 2013 it had identified weaknesses in IRS procedures that allowed payments to go to dead people, and had recommended corrective action. IRS subsequently implemented a process to use death records to update taxpayers’ accounts to identify and prevent improper payments.
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But this control was bypassed for the stimulus checks issued under the Cares Act, which “substantially increased the risk of potentially making improper payments to decedents,” the GAO said. It also said that according to a Treasury official from the Office of Tax Policy, Treasury had been unaware that payments might go to dead people.
https://www.washingtonpost.com/us-policy/2020/06/25/irs-stimulus-checks-dead-people-gao/
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