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    #1

    Direct Deposit to Wrong Account Number

    This is a first for me. Not that I have not made a mistake or two in 23 years of tax prep.
    I entered one wrong number in the direct deposit account number. The routing is correct and one diget off in the middle of the account number. I just realized when I checked on the account number used in prior years. I will have the client fax me a check and go to a local branch and see if they will give me any information. I hope the account did not belong to a teenager that has spent my clients $5,000.00 refund. Of all errors to make, it had to be on a real large refund. Anyone been through this one? Thanks Bob
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    #2
    You have a real headache here

    I haven't personally faced it but when I worked for one of the big box firms it happened somewhere in the general area at least once a tax season.

    The best you can hope for is that the bank will notice that the name and account number do not match, and "bounce" the direct deposit. If that happens, a paper check will be mailed possibly as much as a week after it would have been had a paper check been planned all along. When this happens, everyone heaves a great big sigh of relief and I hope this happens to you but it seems to happen in less than 50% of cases. The bank can tell you whether that happened in this case.

    If the money goes in the wrong account, then the IRS will not cut your client a check unless and until the money is recovered from the person who got it. You will need to get the IRS to go to the bank and the bank to go to the other party. I'd approach the IRS through the Practitioner Priority Line. If the other party is cooperative your client could get their refund any time after late June. If the other party spends the money fast enough and either becomes hard to find or simply protests accurately that they are a low income person with little money and few assets your client may never get their refund unless they get it from you or your E & O Carrier.

    You didn't ask for advice on avoiding this but I am going to volunteer a piece. Every software package I have used has made me enter the RTN and DAN twice each and the second time being without view of the first so that both had to be done from the check. If your software doesn't at least offer you a set up option to make you do this every time, I'd get new software.

    Comment

      #3
      Recovery

      Recovery depends on the circumstances of the errant recipient.

      It will help some that the IRS is involved. People in general do not want the IRS involved in their affairs and will respond to this circumstance when they will not to any other. The bank would be authorized to debit the account as an "error correction" to the extent there are funds available.

      If the recipient is one of those people who has spent the money without asking from whence it came, then neither of the above remedies will work. Don't know what to do at this point other than turn it over to E&O if you have it. There are people in my town (lots of them) where $5000 would be gone forever in a matter of 48 hours. I don't know whether IRS can create a set-aside on this or not, such people of this character get lots of earned income credit. And some of them do not file at all.

      This would be my worst nightmare.
      Last edited by Snaggletooth; 05-04-2011, 08:07 AM.

      Comment

        #4
        I Have The Clients Fee Check

        Hi Guys Thanks for the prompt reply. I found that I had not deposited my clients check in payment of my fee. It is on the Bank of America with a branch 3/4 miles away. I am on my way over and will post The Good, The Bad, and Possibly The Ungly results. The client called yesterday, leaving a message. My sister got her refund and I have not gotten mine?
        I have not returned my clients call as yet. I hope the bank will at least give me some information before I call the client.Wish me luck at the bank.

        Comment

          #5
          Bob:
          Have you called the toll-free number to check the status of the refund?
          800-829-4477

          If the deposit has been rejected by the bank due to an account number mis-match, the system will tell you the status. If you're lucky, the refund check will already be in the mail to the client and you can simply tell them to look for their check in xx days. I had a similar experience a few weeks ago (not exact, but similar), and once the client learned that the check is in the mail, all his anxiety (and mine) went away.
          "The only function of economic forecasting is to make astrology look respectful" - John Kenneth Galbraith

          Comment

            #6
            Drake Tax Software requires us to enter the numbers TWICE and then we can PRINT
            out a form which displays the numbers and we can have our client CHECK the
            numbers and SIGN the form. That way if the numbers are wrong it is NOT our fault.
            Last edited by dyne; 05-04-2011, 10:24 AM. Reason: typo

            Comment

              #7
              Drake also puts the routing and account numbers on the 8879 that the client signs. I always have the client check these numbers and tell them, it it goes the wrong place I don't want it to be my fault (with a smile). They all seem to appreciate the being careful. I know someday my turn is coming, but I hope it is a long way off.

              LT
              Only in government or politics is a "cut in spending" really an increase. It's just not as much of an increase as they wanted it to be, therefore a "cut".

              Comment

                #8
                I would hold the Bank responsible because there was a mis-match. It is the Bank that goofed, regardless of keypunch error................................
                This post is for discussion purposes only and should be verified with other sources before actual use.

                Many times I post additional info on the post, Click on "message board" for updated content.

                Comment

                  #9
                  Originally posted by BOB W View Post
                  I would hold the Bank responsible because there was a mis-match. It is the Bank that goofed, regardless of keypunch error................................
                  Why would it be the bank's responsibility?
                  Jiggers, EA

                  Comment

                    #10
                    They would be responsible to verify all transaction of their account holders. Just because it was a deposit rather then a withdrawal should not matter. Why do you think they are not?

                    When banks get a mis-match or an invalid account number, it is sent back to the IRS which in turn mails a check.
                    This post is for discussion purposes only and should be verified with other sources before actual use.

                    Many times I post additional info on the post, Click on "message board" for updated content.

                    Comment

                      #11
                      Thanks To All!!!

                      Have you ever heard of a LUCKY DAY??? I went to the bank with my hat in my hand. I had the clients fee payment original check that really helped. Lucky for me the diget error of one wrong number came up as an invalid account.What a relief!!!! I went to the IRS and FTB [Calif] web sites and put in the information and was refered back to sorry cannot answer at this time.
                      I called the client, had a nice talk and am mailing a 8821 for her signature, so I can discuss with the IRS. I always check the box on 1040 page two [NO] where asked if it is OK to talk to the preparer. It seems up until now, that I seldom call the IRS. Maybe because I only have 25 clients. What a great feeling when I left Bank of America. Thanks again to all, for prompt feed back.Bob

                      Comment

                        #12
                        Originally posted by SFBOB View Post
                        Have you ever heard of a LUCKY DAY??? I went to the bank with my hat in my hand. I had the clients fee payment original check that really helped. Lucky for me the diget error of one wrong number came up as an invalid account.What a relief!!!! I went to the IRS and FTB [Calif] web sites and put in the information and was refered back to sorry cannot answer at this time.
                        I called the client, had a nice talk and am mailing a 8821 for her signature, so I can discuss with the IRS. I always check the box on 1040 page two [NO] where asked if it is OK to talk to the preparer. It seems up until now, that I seldom call the IRS. Maybe because I only have 25 clients. What a great feeling when I left Bank of America. Thanks again to all, for prompt feed back.Bob
                        FYI on a current year return if you checked preparer as the person to talk to about the return the IRS will discuss it with you without 8821 or 2848. Checking the box on page two is good for 1 year.

                        Also know that some banks don't return the money to the IRS but put it into an account until they figure out what to do with it. At least this is true of SSB checks with wrong numbers on them. In this case the US Treasury, who is the actual payer, has to request the funds and won't send a check to TP until they get them.

                        For the poster that tried to blame the bank....if electronically transferred funds sent to bank have a valid account number and their computer program is written to match the account number but not the name....it will deposit to the valid account number...it appears in this case that the bank program either checks the number against the name or did not have an account for the number that was submitted.
                        Blaming the bank for something the preparer did is passing the buck...you made the mistake you are the responsible party if the funds go elsewhere due to your error
                        Believe nothing you have not personally researched and verified.

                        Comment

                          #13
                          Check with your bank on how they handle this issue.
                          This post is for discussion purposes only and should be verified with other sources before actual use.

                          Many times I post additional info on the post, Click on "message board" for updated content.

                          Comment

                            #14
                            Third party designee

                            Originally posted by taxea View Post
                            ...FYI on a current year return if you checked preparer as the person to talk to about the return the IRS will discuss it with you without 8821 or 2848. Checking the box on page two is good for 1 year....
                            My software (starting this/last year) would generate an error message if only "Preparer" was entered into the Third Party Designee area of IRS Form 1040 et al.

                            The currently acceptable format is my name, and a telephone number, and a PIN code.

                            Apparently this is a fairly recent (this/last tax season?) change by the IRS. In prior years the only thing shown on the line was "Preparer" (no phone, no PIN), but that option will no longer fly.

                            You may have already known this, so this is just clarification/FYI.

                            FE

                            Comment

                              #15
                              Originally posted by FEDUKE404 View Post
                              My software (starting this/last year) would generate an error message if only "Preparer" was entered into the Third Party Designee area of IRS Form 1040 et al.

                              The currently acceptable format is my name, and a telephone number, and a PIN code.

                              Apparently this is a fairly recent (this/last tax season?) change by the IRS. In prior years the only thing shown on the line was "Preparer" (no phone, no PIN), but that option will no longer fly.

                              You may have already known this, so this is just clarification/FYI.

                              FE
                              My software enters what IRS requires when the box is checked
                              Believe nothing you have not personally researched and verified.

                              Comment

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