IRS paid nonresident aliens the same credit twice, four years apart
Summary
In 2021, the IRS's inspector general found 355,015 people ineligible for the pandemic-era Recovery Rebate Credit had received it anyway, totaling more than $603 million -- including $125 million paid to 75,594 people who appeared to be nonresident aliens. The IRS disagreed with most of the recommendations to fix it. In January 2025, running a one-time batch of automatic payments to catch people who'd missed the credit, the IRS made the identical mistake at a larger dollar scale: 300,843 ineligible taxpayers received $447.8 million, including $317.1 million paid to 225,028 nonresident aliens -- people the IRS says it had already written into its eligibility criteria as excluded, but had not actually removed from the payment run before it went out.
The 2021 filing season: a $603 million miss
The CARES Act created the original Recovery Rebate Credit in March 2020, worth up to $1,200 per eligible adult and $500 per child; the Consolidated Appropriations Act added a further $600 per person that December. TIGTA's 2022 review⧉ found the had correctly calculated the credit for 99.3 percent of the 26.3 million Tax Year 2020 returns that claimed it -- but its review of those returns also identified 355,015 individuals who received the credit despite being ineligible, totaling more than $603 million.
Of that group, 75,594 tax returns claiming more than $125 million appeared to belong to nonresident aliens: people whose Social Security records showed no FICA tax withheld from their 2020 wages, a pattern consistent with nonresident status even though they hadn't filed the nonresident tax form that would have blocked the payment automatically. reported the had no process to catch nonresident aliens who filed an ordinary Form 1040 instead of the required Form 1040-NR -- and when recommended a review, management disagreed with the audit's method for identifying likely nonresident aliens and offered no alternative approach of its own. Separately, found 238,680 people under age 25 who looked like dependents of other taxpayers had received nearly $427 million, and smaller groups totaling millions more were paid twice for the same dependent or on more than one tax return for the same qualifying child.
View data as table
| 2021 filing season (2022 audit) | 603 |
|---|---|
| January 2025 automatic batch (2026 audit) | 447.8 |
January 2025: the same category of error, at a larger dollar total
By 2024, most eligible people had already claimed the credit or received it as an advance payment. But at Treasury's direction, the announced it would run one final automatic batch for anyone who had missed it. In January 2025, the sent 1.2 million payments totaling $2.4 billion to people it had determined were eligible. TIGTA's review⧉ of that batch found 300,843 of those payments -- 25 percent of the total -- had gone to people who were not eligible, totaling $447.8 million.
View data as table
| Nonresident aliens | 317.1 |
|---|---|
| Already received EIP/RRC for TY2021 | 117.1 |
| ITIN holders, no valid-SSN dependent | 7.5 |
| U.S. Territory residents | 5.1 |
| AGI exceeded income levels | 1.1 |
The largest category, again, was nonresident aliens: 225,028 people who had filed Form 1040-NR, the nonresident tax return, received $317.1 million they should not have. This time the explanation wasn't a detection gap. Taxpayer Services management told in February 2025 that it had already identified nonresident aliens as ineligible when it wrote the criteria for the batch -- but only learned after the payments went out that nonresident aliens had not actually been excluded from the run. A second group, 68,071 people who had already received the credit or an advance payment for the same tax year, accounted for another $117.1 million; smaller groups tied to dependent eligibility and territory residency made up the rest.
View data as table
| 2021 filing season | 125 |
|---|---|
| January 2025 batch | 317.1 |
What happened to the money
The two audits differ most in what came after. In 2021, made 22 recommendations; the agreed with eight. It declined to review nearly $598 million of the $898 million in improper payments it had already identified, declined to look for further errors in returns processed after May 2021, and said it had no plans to help an estimated 10 million potentially eligible people who had not received the credit at all. In 2026, made one recommendation -- recover the erroneous January 2025 payments -- and the agreed. As of May 2025, it had recovered 28,798 of the 300,843 erroneous payments, worth $42.2 million, and by June 2025 had sent 42,033 recovery letters using a newly built automated tool.
The takeaway
- Nonresident aliens got paid the credit twice, four years apart, for two different reasons. In 2021, the said it had no way to detect nonresident aliens who filed the wrong tax form. In 2025, the 225,028 people had filed the correct form and were already written into the payment criteria as ineligible -- the batch just didn't exclude them. Different failures, same outcome, and a larger dollar total the second time: $125 million grew to $317.1 million.
- The second time, the said yes. In 2021, the disagreed with most of 's recommendations to fix erroneous payments and offered no alternative to the audit's nonresident-alien methodology. In 2026, facing a smaller and more contained batch, it agreed to recover the money and had already recovered some of it within months.
- Overpayment wasn't the only failure in 2021 -- underpayment was too. The same audit that found $603 million paid to ineligible people also found about 10 million potentially eligible people who never received the credit at all, and the said at the time it had no plans to help them.
Figures from the 2021 filing season are from Report 2022-46-032 (May 19, 2022); figures from the January 2025 automatic batch are from Report 2026-406-007 (February 23, 2026). Both were read directly. The 2022 report was not found at a current tigta.gov URL and is cited via its oversight.gov mirror. The two waves involve different laws (the CARES Act/Consolidated Appropriations Act credit for Tax Year 2020, versus the American Rescue Plan Act credit for Tax Year 2021) and different populations of returns; dollar figures are combined in this piece only where explicitly noted as a sum of the two, not implied to be the same claim base. Both audits describe their improper-payment figures as estimates derived from data matching, not confirmed fraud.
Sources(2) ▾
- Treasury Inspector General for Tax Administration, Recovery Rebate Credit Payments Were Issued to 300,000 Ineligible Taxpayers (Report Number 2026-406-007) (2026-02-23) — The January 2025 automatic RRC batch, the 300,843 ineligible-taxpayer estimate and its five-category breakdown, the nonresident-alien detail, 's own explanation of what went wrong, the recovery status, and the single recommendation tigta.gov · original document
- Treasury Inspector General for Tax Administration (mirrored via oversight.gov; not found at a current tigta.gov path), Processing of Recovery Rebate Credit Claims During the 2021 Filing Season (Report Number 2022-46-032) (2022-05-19) — The 2021 filing-season RRC processing results, the 355,015 ineligible-individual estimate and its breakdown (nonresident aliens, duplicate/multi-claimed dependents, dependents already paid EIP), the $598M declined to review, the ~10 million potentially-eligible-but-unpaid estimate, and the 22 recommendations with 's responses oversight.gov · original document
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The Recovery Rebate Credit paid out pandemic-era stimulus money through two separate laws, in two separate waves, four years apart. Both times, the 's inspector general found the same specific mistake: people who are not U.S. residents, and who are excluded from the credit by rule, received it anyway. In 2021, that was part of a $603 million problem the mostly declined to fix. In January 2025, running a one-time correction batch specifically meant to pay people the credit correctly, the made the identical error again -- at a larger dollar total, and after telling auditors it already knew nonresident aliens should be excluded.