Incorrect Direct Deposit of Tax Refund

You need to file a report with the police. It is a crime for this person to keep the funds.

My son is going through the same thing right now. He was told by the bank that they cannot take the money out of the account it went into unless the tax agencies request this. I contacted the FDIC who told me to call the Office of Comptoller of the Currency which overseas banks. They confirmed that the bank was correct about not being able to move the funds without a request. I was also told that the tax agencies simply put the money in whatever account is given.

My son caught the mistake the day he came home from the tax preparer’s office but the return had already been submitted. He called the IRS and they have no system for a taxpayer to change the account number after the return is submitted. This is a major flaw in the system. He was incorrectly told by the IRS that the bank would return the funds as the account number would not match the SS# and name on the account. This is not true. He called the bank and they were supposed to watch the account but did not.

I called my congressman’s office. I was told to contact the tax advocate for each agency. There are forms online to complete and submit to get help. So far we have heard back from the state that they would work on this. No reply from IRS tax advocate. The bank manager also tried to work with the agencies on my son’s behalf as did his tax preparer. In all he and I have spent about ten hours trying to get this resolved. Both the IRS and state agency representatives say they are trying to get a request for deposit reversal but it could take weeks. Meanwhile the person whose account it went into is spending the money.

I suggest that if this happens to anyone, write letters immediately to bank, tax agencies and elected representatives to document the situation.

I agree. This is a major flaw in the tax system. If someone other than the taxpayer cashes a check from the IRS, then the IRS and the Treasury Department can prosecute the offender on bank fraud. We definitely need more protection for direct deposits. Write your Congressional representatives!

First I contacted my representative Brad Sherman’s office. They were not any help. Then I hand delivered a letter to Senator Feinstein but never received a reply. I have emailed and called and no one helps. Now my son haw has sent a form and the letter to Barbara Boxer to open a case. We will see if she cares. I do not belive that this is just between the bank and the individual. The government is to protect us and they fail all the time. The police have opened a case but are slow to press charges. I am taking this to the media next.

How can you file a police report? I do not know the name of the individual. Can any help please?!

Hey Jann Shaw what kind of case are you trying to open with Barbara Boxer and what form did you submit. Please let me know so I can do the same.

I have exactly the same problem. My federal tax return was direct deposited in an incorrect account, and the guy spent all the money. I talked with IRS and the bank numorous times, but it still has not been resolved. IRS filed fund return request to the bank and the reply was “insufficient fund”, so they could not draw the money back. I know the incorrect account number and also the person’s name. What should I do next? Is it criminal for the creditor to spend the money? Any advice would be appreciated.

This is a major flaw in our tax and banking laws. All I can say is to seek legal counsel and try to get the Taxpayer Advocate involved as well. The more cases that go through the Advocate, the more likely that Congress will wake up and realize that people should not lose their refund checks.

Hello, for people who have encountered this problem, what would you recommend as a course of action to get your money back?

Emily, people who have lost their refunds due to inaccurate direct deposit information need to contact the bank. They will have the wrong bank account information (it will be on their tax return), so the bank will be able to look up the information. People will likely need to talk to multiple bank managers, as not all know how to fix this problem. I have found that contacting the manager of the bank’s EFT or ACH department helps expedite matters. I also recommend submitting a report to the Taxpayer Advocate. The more reports of lost refunds they receive, the more likely they will continue to hound Congress to fix the laws on this issue.

ALICE, How did you find the person’s name?
I’m in the same situation this year and nobody seems to care (its not there money.
I’ve been going at it for 3 months now and still didn’t get nowhere. I believe my preparer knows where my money went but I have no proof, if only I could find out the persons name then I’ll get somewhere
Please let me know

Felipe, you will not be able to find out the person’s name. But you do know the incorrect bank account and routing number, as that is the numbers you incorrectly listed on your tax return. You would then contact the bank and ask them to investigate the matter and send back the tax refund deposit.

I am now facing the exact same problem. I just found out that my tax preparer put the wrong number of my bank account and IRS has already sent the money to the wrong account. IRS has yet sent, but scheduled to send the stimulus check next week.

My refund is more than $5000 and it is a combination of two years’ refund because I kept the money as tax credit for tax year 2007. The total amount is more than $7000 if combined with the stimulus check.

I hope this won’t be the most expensive number mistake for me. I’ll contact IRS and my bank first thing tomorrow, but I am really concerned.

I am really pissed off by IRS if name and SS are not included in the direct deposit to avoid potential problems. They could have asked a void check with the account number just like many direct deposit paychecks ask for.

Did anyone suffering from the same problem get positive outcome eventually?

Yuchong, get ready for some administrative headaches ahead. I’m not kidding. The IRS won’t help you. The Taxpayer Advocate will take your information for their report, but they won’t help you either. This matter is between you and the bank. Fortunately, you have the wrong bank information (it’s printed on your tax return). Find out which bank that is. You’ll want to talk to a manager that works in the bank’s ACH department. You’ll need to explain your situation. It will help if you can show them your tax return as well so they can look up the account information.

There’s basically three possibilities from this point. (1) That wrong account is a real account. Meaning, the account numbers belongs to someone. Your money is probably long gone, and your chance of getting it back are slim. (2) That wrong account doesn’t belong to anyone. The bank will see that the account isn’t assigned to a person. The bank could then bounce the deposit back to the IRS. And the IRS will then re-issue you a refund by check. The third possibility is that the bank will be unwilling to assist you claiming that it’s not their fault. Technically, that’s true.

As for me, I always triple check the direct deposit information. If I ever have any doubts about the information, I leave it off and have the refund come by check. That’s because the IRS can track checks and see if a check was cashed fraudulently. There aren’t similar controls for direct deposits. And I get really angry when I see other tax preparers being so sloppy with the direct deposit information. This is a truly upsetting experience, as the client can actually lose their refunds. If your accountant is unwilling to help you, I’d consider filing a complaint. Currently there are no regulations that demand that a preparer conduct any due diligence for direct deposit information. And that’s something I would actually like to see happen. I’d also like to see something similar for software providers as well.

So in summary what I would do is:
1. Find the bank
2. Talk to the ACH manager at the bank
3. Persuade the bank to sent the refund back to the IRS
4. Contact the IRS and explain that the bank will be sending back the refund.
5. Ask the IRS agent to fill out a Taxpayer Advocate Service Request (Form 911) to route your case to the taxpayer advocate.
6. When the Advocate contacts you, explain that you want this incident added to their annual report as a direct deposit error.
7. In the future, always get a check, unless you are 100% sure that your bank info is correct.

all this direct deposit stuff, poses a serious problem for the new stimulous check for this next tax season, due to the fact that if you do not have direct deposit the government will not issue you your stimulous check because they plan on saving money this year by not cutting paper checks, so like the last responce, make sure you double and triple check your info prior to filing for this next tax year. Sincerely your guardian angel

HI I HAD WANTED TO KNO SO WHEN THE PPLE DATS SENDING UR TAX REFUND DIRECT DEPOSIT TELLS YOU IF THE SSN# AND THE NAME DNT MATCH THE ACCOUNT THAT IT WILL BE SENT BACK THATS NOT TRUE?

Tyra, when the name and SSN# don’t match, the IRS rejects the tax return and sends an error message to the software company or accounting office that filed the return for you. In that case, a return has not been filed, and so the IRS will not attempt to send out a refund. You should use this as an opportunity to double check the bank account numbers in the direct deposit area of your tax return, as any mistake in those numbers could result in you losing your refund forever, as some people here have learned the hard way.

What you mean losing your refund forever. and i was saying about hat that lady said she was lyke the irs told them if the ssn and the name on the back account dnt match the one on the return then it wont go thru. but his went thru to sumbodi else account so how is that true about it having to match?

I made an error when doing the state tax and entered my ex husband’s SSN instead of mine. I got an email today saying that the return is “Accepted.”
Will this affect my ex (who doesn’t pay any state tax because he’s in the military) when he files?
I’m also sure I will need to do amended return but since it’s now accepted, I’m not sure when to file the amended return. I really don’t want this to affect him or myself…?

Tyra, you’ll want to call the IRS to see if they can stop the refund from going out via direct deposit. You’ll need to call quick, otherwise the refund will go through to the wrong bank account, and your chances of getting the refund money back are slim. Call the IRS at 1-800-829-1040.

Tara, you may want to call the state to see if they can stop processing the tax return. Otherwise you’ll need to amend the return to zero everything out, and then submit a new tax return in your name only. Now you may be able to change just the name and SSN on the return. Again, talk to the state and see what they recommend as the best way to fix this problem.

Different Question – hope you can help, my bf did his taxes probably a week after i filed mine. mine came back fine being accepted by the state/federal. i got this email msg saying that it should be deposited on 2-6-09, and the same email msg went to my bf. (we both used the same acct)so regardless, today is the 9, and still no refund, BUT my bf got his…and he filed a week after me…any thoughts?

ok mines a little different. I have an online account with just a loadable visa which I have my work check direst deposited to. When I went to do my return I brought up the info for my tax guy, who is a friend by the way, because he insisted that the routing # was the same. I wasn’t so sure so I logged in and showed him and it wasn’t the same routing #. I sat back down and asked him to check the account # before he logged off and he said that would be the same also. Well I went to the IRS site to check on my refund status and it said it was deposited on Feb 13th. I double checked my paper work and sure enough it wasn’t a matching acct #. I called my bank and they said it wasn’t even a valid account #. From the info I have gathered so far it seems that my refund will reroute to the IRS and I will be cut a check. Has anybody had this happen to them and if so how log did it take for them to receive a check?

I put too many digits on the account #. The last four digits are the check number. I am stoopid!

But my bank said the direct deposit would be immediately rejected. Now I wait for the state and the feds to cut a paper check.

Patient and meek.

Cindy, it’s possible your tax refund might be delayed. You can check the status of your refund on the IRS web site, and that should indicate if there’s a delay and if so the reason why. I’d also double check the bank information on your tax return vs. the direct deposit information for your bank just to make sure the numbers are the same. If the IRS web site shows that your refund has been sent, I would double check with the bank, and then call the IRS for help in tracking down the refund.

Joe, it sounds to me like your bank is being proactive about rejecting refunds to a non-existent account number. However, the last time I encountered this problem the bank did not automatically reject the refund, and we had to track down a bank manager with the authority to investigate this. In the best case scenario, I would expect a refund in about 8-12 weeks. In a worst case scenario where you have to deal extensively with the bank, I would allow up to 6 months for this to resolve.

Mike, if you filed recently (within the past week) you may be able to call the IRS and ask them to switch this to a paper check. They will sometimes do this, and it can help speed up the process. The IRS phone number is 1-800-829-1040.

I am in the same situation! IRS deposited my refund on Feb 13 to a wrong account and I didn’t find out that it was wrong until today!! I called IRS and they told me that the check they deposited would probably go back to them, or if not, I can submit form3911 and they will cut me a check. Is it really that easy? I trusted them until I saw all these comments here!

And how can I find out if the wrong account number is a valid account? I contacted my bank and the person on the phone said that the account number didn’t exist in California, but she didn’t know if it existed in other states. So if the account number and the routing number don’t match, can the deposit go through?

And who knows if we can find a ACH manager in a local branch? Actually I don’t even know what ACH means… =.=

Our situation is a bit different: my boyfriend put down my checking account number (his name isn’t on it) because I pay the bills. The bank said it would NOT deposit in my account and will return it to the IRS if the names don’t match. We’re not sure how to change the account is should be deposited into now…or if they cut a check for a large amount – his refund is over 6k.

Christina, what I’ve seen is that the bank usually holds onto the funds even if the account doesn’t “exist” until you talk to someone in the bank with enough authority to actually investigate the matter. This is not a simple matter, and the steps I outlined in comment #14 are what I had to go through the last time this happened to one of my clients, and the manager we talked out worked out of the bank’s headquarters in New York City. So you will likely need to be very proactive about contacting various managers at your bank to get this resolved satisfactorily.

Sydny, I’ve never seen a bank actually match name/ssn on the refund vs. the accountholder. So it’s likely the deposit may go through. But then again every bank operates differently, so your refund might get bounced back to the IRS. There’s no way for you to change the account numbers after the return has been filed. You’re simply going to have to wait to see if the refund comes through as a direct deposit or as a paper check.

My refund was direct deposited on 2/20, but to a non-existent account with a one digit difference in account numbers. The IRS has opened an investigation, and the bank says b/c it was a non-existent account they would have returned the funds. Can you give me your best guess as to what to expect next?

Cady, you need to make sure that the bank actually sends the refund back to the IRS. See the steps I laid out in comment #14. Banks differ in whether they will do this automatically. In my experience, the bank has to be prodded and cajoled into returning the refund. At least the account didn’t belong to someone else, so you know the money is still there.

Man you guys are way too nice. I’d first threaten the bank with criminal and civil lawsuits for fraud, and possibly use a subpoena to retrieve the name of the person who received the stolen money, and use the same lawsuit threats against him. Then I’d move ahead with whatever lawsuits are most likely to recover the stolen funds. Even if I lost out due to legal fees, I’d still be happy to be punishing a thief! I’d also try to get the IRS and the various organizations that fight money laundering at a federal level to charge the person and the bank. Everyone loves expensive lawsuits, and federal crime charges. Or do they? Anyway, I’m not a lawyer, but with full documentation I’d be surprised if I lost the case, and besides it’s worthwhile to kick criminals asses anyway, for the personal satisfaction, and it makes for a more polite society.

I agree though that this is a major problem, and everyone should be wary of using direct deposit. Also the congressional leaders should fix this.

Oh, and please don’t take my above statements to be legal advice. Do whatever your lawyer says…at least ask for some legal opinions of whether your cases are worthwhile. I’m surprised that people are just so polite. I’d be out chopping heads off.

My husband, and I filled both federal and state taxes, few weeks later we found out that our account number is wrong, we miss to put one number on the account number but the routing number is correct. what can we do, are we going to call IRS or the bank?

This year my return went to the right bank, wrong acct number. I too am being given the runaround. To date the bank reversed 3,100.00 of 14,300. Since then I acquired the other account’s customer name and address. I have filed a civil lawsuit against that person and my bank for the balance plus interest. If and when this works out for me, I will give you all updates and lets hope some good contact information.

I for one am happy I am a Prepaid Legal member. So I can pursue this legally all for a monthly payment of less than 40.00.

Why does this have to be so complicated with a direct deposit wire transfer? If someone using moneygram or a western union transaction can get that money to the righ person, why can’t the banks and the government implement methods and policies similar to Western Union?

They get the transfer, and require identification for the payee to get access to the money. I have never known this to not work after many times of doing wire transfers through them.

Honestly, this does not sound to difficult to make a few tweeks to make sure the rightful person gets their money!

Are there any lawfirms or consumer groups trying to do things to make this process right? Would it be worth establishing a website dedicated to this and spreading the word? With enough names and stories about this happening eventually some progress could be made.

I will be checking back here periodically for more posts. Good luck to everyone that has experienced this problem.

I agree, sportsnme, that this is a major problem. The bank information is the one part of a tax return that cannot be changed. My suspicion is that the IRS and the banks simply don’t care at all about this issue. The IRS’s position has been that as long as they deposited the money to the account indicated on your tax return, that they have done their job. The fact that the agency is unwilling to use their almost infinite powers to collect to actually benefit an affected taxpayer who made a simple transcription error astounds me. One client who’s an attorney said the problem is really with the electronic banking laws. I don’t know much about that, and I’m willing to take her word for it.

Febe, see the steps I outlined in comment #14. That’s the steps I perform whenever a client encounters this problem.

Can someone please help. My bank rejected a DD tax refund but the bank manager told me they tried to send the money back 3 times and that the us treasury would not accept. Now they are saying that the feds must put in a claim to request the money back. Could this happen where the bank tried to send it back 3 times and the US Treasury wouldn’t take it?

Brklyn, call the IRS at 1-800-829-1040 and explain the situation to them. I’ve never heard of this scenario before.

i like a dummy filled out my own taxes in 07 i didnt claim head of household for my son and I. I also had to fill out a 1040x and mailed it in on 3-13-09. How long does it take the IRS to be able to give me a status on this the my return was 151.00 cause i didnt fill out head of house hold then i changed it and my refund jumped 2321.00 i could really usr this money. Does it take long to get an amended refund? thanks for all your help

Bradley, it takes about 8 to 12 weeks for the IRS to process an amended return. And allow another couple of weeks for the checks to go through the mail.

On our tax return for 2006, there was an incorrect bank account number on our return (it was short 1 digit in the middle of the number) but the money was deposited in our account.
In 2007, the same account number was used and this time it was put in someone else’s account. The bank advised this person had withdrawn the money and had overdrawn his account several times and they could not refund us the money. They advised that we would have to file a claim in Small Claims Court and subpoena the information on this account and then file a claim against the person who received this money. Their attorney told us, when we asked how they handled an account that did not have enough numbers in it, that they added zeros. This appears to me that they are forcing accounts instead of checking them out once they have been rejected.

Charlotte, what a horrible situation. I agree with you that banks go verify the account numbers first, and if they don’t match to return the deposit to the I.R.S. That would make a whole lot more sense that depositing the money in the wrong bank account. I would talk to an attorney, and quick, to force this other person to pay back your refund money.

I am going throgh the same thing. I am trying to get a hold of the Tax Advocate. I wonder how many Americans go through this same thing as direct deposits become more and more prevalent.

Phill, sorry to hear that you have this problem too. I have not been able to find any data on how many people lose their refunds because of incorrect bank information.

If a bank accidentally deposits money into your account, you must return it – failure to return it is theft. How is it any different when a deposit is made into an incorrect account – surely the bank is responsible for facilitating getting that money to the correct account? Also, the IRS’s failure to provide a mechanism for changing the bank account number is medieval.

I agree with you, Astounded and paranoid, that this is theft and that there are insufficient safeguards in place to allow banks and the IRS to correct such problems. The IRS is taking the stance that they are powerless to do anything, since the person indicating the bank account into which the IRS should deposit the money. Thus the agency claims no responsibility for following the person’s wishes. As a result, I always triple check the account numbers, and if I have any doubt whatsoever that the information might even remotely be not 100% accurate, I force my client to get a paper check. There’s more safeguards with paper checks. For example, the IRS can trace a check, find out who cashed it, and pursue bank and tax fraud charges. Those sorts of investigative safeguards are completely lacking with direct deposit.

Few days ago filed tax return and chose direct deposit. Double checked routing number and account number but wrote “wrong” bank name.
Why is it wrong? My account was opened in Washington Mutual bank but due to recent bankruptcy (or whatever) was bought out by Chase.
My return was accepted by IRS.

The question is will the different bank name cause delay/cancellation of the return though routing number and account number are correct?

thank you for oppinions

My taxpreparer entered an incorrect account number on my filing for 08″.. The refund was set up as a Refund Anticipation loan.. I filled out a form 3911 within days after the error was made and the IRS did a formal investigation. Yet the Bank that received the funds from the IRS sent a letter after the investigation stating the funds were deposited correctly. To add insult to injury the person who received my federal and state refund spent the money. Isn’t the bank responsible for verifying the acct information upon a federal investigation? If they did, they would have clearly seen that my social security # and personal information did not match the account the money was sent to. I don’t know what to do.. I have spent the last 5 months trying to get this resolved. I can’t afford a lawyer.. Is there any way of getting legal aid or assistance in persuing the bank?

I wish I had run across your site and comments before I started my journey to recover my tax refund. I have learned all of the above with no results but my bank and accountant are at least discussing it. IRS says I don’t qualify for a tax advocate. My accountant had a deposit slip (but I did not know that the bank routing number was not on it) and they called the bank to get the routing number and the bank told them the wrong set of numbers on the deposit slip to use. Bank says they keep incorrect deposits in a sepecial account and all they want is the ACH reference number, but IRS says they can’t give out that information. Surely if we owed the IRS they would be after us with all they have. Thinking positively for good results.

Hi everybody, same problem here. I wrote the wrong account number and I am trying to get my money back since January,09. IRS and bank wont do anything. So I am going to the small court to file civil law suit against the person who illegally spent my money. Money just dont fall down from the sky, it is a theft and I hope I will get my money back. Question for Sportsnme, how is it going with u? Did u file???? Please let us know what is going on with ur case.Thank u.

God i have the same problem. IRS deposited my refund on April 10 to a wrong account, I realized about it before they deposited that money and of course I called to IRS and the Bank. IRS couldnt change my account number, and Bank said they would reject the money since my name and ss didt match with the account. Also Bank(citizens bank) checked that account telling me it doesnt exist. Well so far I havent recieved that money, IRS says they havent hear from the Bank and Bank says they havent got the money. I dont know what to do, besides Im not in USA now.
Well how can this happen if the routing number, account number and name dont match? Bank said that, but IRS still insist that the bank actually got the money. :S

hope you can help me.