Need advice

[Questionguy101]

Well, my friend, who is also a tax professional, has made a mistake,

He has entered the bank information of one client (client A) on the tax return of another client (client B) by mistake. Now the tax refunds (federal and state) of client A has been deposited to the account of client B. He knows it's going to take a long time to notify the tax departments and then go through the whole process to get it fixed while client A is waiting eagerly for his refund.

He is now in a panic mode and ask me what he should do to correct the mistake. I don't have the slightest idea either. Does anyone here has the experience or the knowledge as to how to handle such situation?

[Gretel]

I don't have any experience with this, probably one of the biggest nightmares any of us could encounter.

I think the simplest way to correct this is to have client B write a check to the accountant and accountant writing a check to A. Since everything seems processed I cannot even think would the agencies could do about this.

[RitaB]

Keep it simple

Since everything seems processed I cannot even think would the agencies could do about this.

Agree with Gretel, and I would even suggest that Client A just issue a check to Client B.

[Gene V]

My experience

Been a couple of years ago, my experience was, that the bank did not deposit the refund because the name and account number did not match.
My client got a check from the IRS a few weeks later. That’s the way it is suppose to happen, unless the bank has changed their policy.

In your case--I agree with the other posters

[Matt Sova]

Been there, done that

This happened to me about 10 years ago or so. My secretary wrote down the wrong name (client's had the same first name) when he called with his bank information. About 4 months after the return was filed he called and wondered where his refunds were. It took some detective work but I found that it went to another client of mine. I called the client that got the money, told him what happened and he sent me a check for the refund amounts. I then sent the original client a check for the amount. Needless to say, neither one ever came back.

[Jiggers]

Get client to verify account before e-filing

My software prints a sheet that the client has to review for bank account name, routing number, and account and then must sign that this information is correct.

[Chief]

Jiggers

What software do you use?

[Lion]

Me, too

My software also prints a sheet with all deposits and debits on one page. I have the client check and sign it. I use ProSystem fx. I just wrote to CCH to ask that they add a formal signature line for clients to approve their banking information.

[Questionguy101]

I agree it is a serious mistake but I can kind of understand how it could happen during the peak of the tax season. We are all only humans after all.

[S T]

Bank Account Verification

My softwrare also provides the Bank Account Verification and I supply to all my clients for Signature prior to filing. TaxWorks - and it does have a signature line.

There have been several Clients that have said "oops" we changed bank accounts and then have provided the "correct information" for the direct deposit for 2009.

It has now become an integral part of the signature sheets, and I won't process a direct deposit without it

Sandy

[oceanlovin'ea]

ask the client

I always ask the client if they want their refund to be deposited in the same account in "blank bank" as last year. That usually triggers them to stop and think if they made any changes.

Only problem comes with the banks merging, etc and new routing numbers for some locations.

Linda

[snowbird]

First verify that 'the tax refunds (federal and state) of client A has been deposited to the account of client B" really happened. Notify the bank involved since name and numbers would not have matched. Just had a situation where a bank returned the electronic deposit to the IRS because the deposit was in MFJ (both names) and the account was only in the husband's name.

[taxxcpa]

Client verification

Drake prints a form for the client to sign agreeing to the bank information. I had not noticed it until a client sent a signed copy to me. He failed to send the form 8879 so I had to call him to get him to sign and send me the 8879

[Black Bart]

I'd call B, tell him the story, hope he is an honest man, hasn't spent the money, and will be willing to write a check to A. As everybody says, that would be much quicker than trying to fix it through IRS (probably take months that way). Nobody's tax position will be hurt since the refunds are issued to the right social security number.

If B won't do it, then preparer could say IRS will be sending a field agent to see him in a few days if he doesn't pay up now. Not true, of course, but he won't know it and everybody is scared of the government boogeyman.

If all else fails, maybe call the Practitioner Priority Line (1-866-860-4259) and see if they can/will propose a short-term solution.

P.S. Snowbird's right -- first make sure that it really happened.

[Jiggers]

Drake

What software do you use?

Drake software provides a very nice sheet that the client signs. I won't e-file the return until this is signed.