The Internal Revenue Service is once again depositing the latest round of Economic Impact Payments in the wrong bank accounts in a replay of problems experienced last year by many taxpayers.
The problem stems in part from tax preparation companies that used temporary bank accounts in previous years where taxpayers could receive their tax refunds, while the tax prep companies took a portion of the refund for payment. The temporary bank accounts were later closed, but the IRS relied on the old information it had on file for those bank accounts when it began making direct deposits this week of the latest round of stimulus payments.
The banks have to send back the deposits to the IRS, and taxpayers will have to update their information with the IRS directly. However, some are already complaining about the problems in receiving the much-needed payments in the midst of the economic crisis from the pandemic. They have been checking the IRS’s online
“Because of the speed at which the law required the IRS to issue the second round of Economic Impact Payments, some payments may have been sent to an account that may be closed, or is no longer active, or unfamiliar,” said the IRS on Tuesday. “By law, the financial institution must return the payment to the IRS; they cannot hold and issue the payment to an individual when the account is no longer active. If Get My Payment shows ‘Payment Status #2 – Not Available’ you will not receive a second EIP. The IRS advises people that if they don't receive their Economic Impact Payment, they should file their 2020 tax return electronically and claim the Recovery Rebate Credit on their tax return to get their payment and any refund as quickly as possible.”
Some customers of both H&R Block and Intuit’s TurboTax have reportedly been among those who have been affected and the two companies are providing some information about how to deal with the problem.
“If you purchased Refund Transfer with last year’s taxes, the IRS Get My Payment tool may be reflecting that account number,” said H&R Block on a
However, H&R Block acknowledged that for some customers, the second stimulus payment may have been sent back to the IRS and they will need to claim the tax credit on their tax returns later this year. “All financial institutions are required to return second stimulus payments in certain circumstances, such as when they are sent to a closed account. In these cases, payments were returned to the IRS and a check is likely to be sent by the IRS,” said Block. “This affected less than 1% of second stimulus payments processed by H&R Block. Changes can be reconciled at tax time. For those who did not receive the first stimulus payment, believe they did not receive their full stimulus payment amount, or had changes in their circumstances, such as the birth of a baby, a
Intuit explained the situation on its
On Wednesday, Intuit said in a
On Friday, a TurboTax spokesperson emailed Accounting Today to say, “Stimulus payments for millions of TurboTax customers affected by the IRS error will be deposited starting January 8th. We have been working tirelessly with the Treasury and IRS to get stimulus payments to our customers. We know how important these funds are for so many Americans and we regret that an IRS error caused a delay.”