Client Gave Wrong Account Number Already Efiled

[beck]

My client added a 1 at the end of his account number. He realizes that he gave me the wrong information. I told him to check with his bank. In turn his bank told him to have me call IRS.

Well my tax gurus......any advice on how to handle this?

Thanks,
Beck

[quicksam]

Nothing that can be done. The bank will kick the deposit back to the IRS, and then after a few weeks the IRS will mail the client their refund.

[FEDUKE404]

Simple answer

Tell the client to be more careful next time, and not to be in a hurry for the paper check to arrive.

And then move on to something else that is a better use of your own time, this being the last week in March.

FE

[smithtax]

If there's an account at that bank with the additional "1", that's where the refund will be deposited. It's a wire transfer. The bank doesn't have anything to do with the electronic deposit.

I'd have the TP check with the bank to confirm that there isn't another account, and if there is, call the IRS immediately.

[Gary]

Triple Check

My software requires me to enter the routing number and account number twice. Then I read the numbers back to the client as a triple check. At that point, it is no longer my fault if the account number is incorrect.

[David1980]

Most likely the refund will bounce back to the IRS and the IRS will then mail a paper check.

Of course, it is possible the bank will accept the deposit to the wrong account. It happens, though not often. http://www.komonews.com/news/consume...135075253.html

Personally, I like to see a voided check. The taxpayer might remember it wrong, but they're not likely to have checks printed with a wrong number.

[FEDUKE404]

From the IRS (if all else fails)

Question:

What should I do if I’ve entered an incorrect routing or account number?

Answer:

The IRS assumes no responsibility for tax preparer or taxpayer error. Please, verify your account and routing numbers with your financial institution and double check the accuracy of the numbers you enter on your return prior to signing and submitting your return.

Be very careful entering your account and routing numbers. The IRS will handle account or routing number errors on split refunds the same as for regular direct deposits.

For example, if:
•You omit a digit in the account or routing number of an account and the number does not pass the IRS's validation check, the IRS will send you a paper check for the entire refund;
•You incorrectly enter an account or routing number and your designated financial institution rejects and returns the deposit to the IRS, the IRS will issue a paper check for that portion of your refund; or
•You incorrectly enter an account or routing number that belongs to someone else and your designated financial institution accepts the deposit, you must work directly with the respective financial institution to recover your funds.

Solution
•Generally, if the financial institution recovers the funds and returns them to the IRS, the IRS will send a paper check for that refund out to the taxpayer's last known address on file with the IRS.
•After two weeks have passed with no results, file Form 3911, Taxpayer Statement Regarding Refund.
•If the return has not already posted to our system, you can request for us to stop the direct deposit.

http://www.irs.gov/Help-&-Resources/Tools-&-FAQs/FAQs-for-Individuals/Frequently-Asked-Tax-Questions-&-Answers/IRS-Procedures/Refund-Inquiries/Refund-Inquiries-18

FE

[beck]

Thank you my fellow tax peeps. I will have him go back to bank and make sure that it is not a valid account number. Then I will tell him that if the bank kicks his refund back to IRS, then they will issue him a check. (And personally I'll check the Where's My Refund status).

Thanks Fed for the IRS link. I saved that to my favorites for future reference.

In 17 years, this is the first time this has happened to me. I'm very careful. I have evidence he gave me the wrong number and he readily admits the mistake. At least the refunds are both under 300.00.

Thanks Again!
Beck

[taxea]

Nothing that can be done. The bank will kick the deposit back to the IRS, and then after a few weeks the IRS will mail the client their refund.

Many banks put the funds in an escrow account rather than sending it back to the IRS. File a request for refund and the IRS will research the location of the funds. TP will not get a check for the refund until the IRS determines that the funds were returned to them. They will, if necessary, contact the bank.

To prevent this in the future ask the client for a voided check or a copy of a statement for the account he/she wants the refund deposited into.

[Jiggers]

I require my clients to sign off on the e-filing form with the bank name, routing number, and account number while looking at the actual check.

I don't let them do it from memory.

Even if this is the same account used in prior years, I make them do this. You never know if the bank was acquired by another bank, changed their routing number, changed the bank account numbers.

[AZ-Tax]

Benefit of getting paid via check

Another year I still dont accept cards for payment and once again I will need to look into it this summer but one of the benefits of accepting checks is that I can verify if the direct deposit data is correct the TP entered on the tax organizer of course if that is the acct they desire the direct deposit for which I ask. ProSeries transfers the TP's direct deposit data tax year after tax year. I basicially need confirmation from the TP that continues to be their current direct deposit info and that is done in my tax organizer that nearly 90 of my clients complete.

[FEDUKE404]

Careful of information source

Many banks put the funds in an escrow account rather than sending it back to the IRS. File a request for refund and the IRS will research the location of the funds. TP will not get a check for the refund until the IRS determines that the funds were returned to them. They will, if necessary, contact the bank.

To prevent this in the future ask the client for a voided check or a copy of a statement for the account he/she wants the refund deposited into.

If you merely rely on a "bank statement" you are asking for problems! Many/most bank statements show a truncated account number, aside from the increasing use of listing only a few numbers preceded by asterisks. My own bank statement shows 7 numbers for my checking account, whereas the correct number for use of ACH deposits/debits consists of 12 numbers.

The ONLY way you can be certain the correct information is being sent is to view the numbers on a check (and not on a deposit slip...they may differ!).

For savings accounts (no checks) a similar amount of due diligence is necessary to verify the full account number. I would have the client call the bank, or bring you a "To Whom It May Concern" letter with the relevant information shown.

Oh yes: It is not unusual for banks to modify/update their account numbers without ever changing the underlying account. There may be a grace period when the old number might work, but at some point it will not do so.

It goes without saying: You should have the client at least verify the bank information each year!!!

FE

[taxea]

Why wait 2 weeks to file the 3911? File it as soon as you know an error has been made.
The banks frequently put the funds into an escrow account rather than send them back to the IRS. The sooner the IRS gets the 3911 the sooner they will take action on it and it could take up to 6 months before the TP sees a check.

How to avoid this: ask the TP for a voided check or a copy of a recent statement of the account the funds should be deposited to. And never assume tp will be using the same account from year to year. Always verify the information each year. If he selects a different account get a voided ck or statement for the new account.