Pensioner Elizabeth Harris was left distraught after she opened a letter from the taxman telling her she was dead.
But to rub further salt in the wound, the blunder left the 89-year-old without her pension for the last three months.
Mrs Harris, of Carharrack, near Redruth, Cornwall, said the HMRC letter was addressed to the representative of her estate and stated: 'I'm sorry to hear of your recent bereavement and I recognise this is a difficult time for you.'
Son-in-law Dave Crabtree, who is the Cornwall councillor for Illogan and Portreath, has worked tirelessly over the last few weeks trying to get the error fixed and her pension reinstated.
Mrs Harris was advised to complete a form for the 'executor' of her estate, in which she put down that she was still alive and returned it in the post in late June.
'She then realised her pension had been stopped. I phoned HMRC on June 28 and was told they'd received the form, but for the pension to be reinstated I had to speak to the Department for Work and Pensions (DWP).'
When the payments still did not arrive, he discovered that she was alive on one system - but dead on another.
According to the advisor, she had 'died' on May 11.
Mrs Harris has been left without her pension for three months and has become increasingly anxious that her savings are running low.
Mr Crabtree told local paper The Falmouth Packet: 'So we have a lady who's 90 in October who has gone three months without her pension and no mention of compensation.
'At the moment she's alright, but she's getting to the state where she's panicking because money is getting low.
'She's frightened to spend anything in case the bills keep coming in and she's got nothing to pay them with.'
It is believed the payments finally returned earlier this week after Mr Crabtree contacted the media, The Mirror reports.
In a follow-up interview with ITV, he said: 'Our main concern is how many people has this affected? This can't be a one-off.
'I actually got a call from a former tax inspector thanking me for bringing this problem to the attention of others.
'Many elderly people might not have people that could help them if they were in this situation.'
MailOnline contacted HMRC for comment, which deferred to DwP, as it is responsible for pensions.
DwP told MailOnline that it was unable to comment on this case.
