Refund to wrong account

[Super Mom]

I have a client who says she gave me an account that has been closed (I don't even know how a person can make that mistake!, at least it's not mine!) She is texted me wondering what to do. I'm thinking when the bank refuses the deposit, the IRS will just mail her a check, right?

[Super Mom]

The IRS says "if your return has not already posted, you can stop the direct deposit"---I don't know if ACCEPTED means POSTED or not, I'm sure the money's not been deposited yet--accepted on the 6th.

[taxmom34]

so, your client gave you an account that was closed for deposit of her refund, right? well, the bank will refuse when IRS sends electronically and IRS will in turn send a check to address on tax return.

[David1980]

I have a client who says she gave me an account that has been closed (I don't even know how a person can make that mistake!, at least it's not mine!) She is texted me wondering what to do. I'm thinking when the bank refuses the deposit, the IRS will just mail her a check, right?

As long as the bank account is a closed account I wouldn't worry to much. The IRS will attempt the deposit, the bank will refuse it, then the IRS will issue a check. It'll take longer to get the refund of course since it's going through additional steps it wouldn't have had to if they had just mailed out a check to begin with.

A wrong account would be much greater reason for concern vs. a closed account. Every year you see a few news stories about it - this one for example http://www.komonews.com/news/consume...135075253.html

IRS page for this scenario: http://www.irs.gov/Help-&-Resources/...d-Inquiries-18

And the scary paragraph:

If you have contacted the financial institution and two weeks have passed with no results, you will need to file Form 3911 (.pdf), Taxpayer Statement Regarding Refund, to initiate a trace. This allows the IRS to contact the bank on your behalf to attempt recovery of your refund. However, if funds are not available or the bank refuses to return the funds, the IRS cannot compel the bank to do so. The case may then become a civil matter between you and the financial institution and/or the owner of the account into which the funds were deposited.

[RitaB]

Welcome to my world

I have a client who says she gave me an account that has been closed (I don't even know how a person can make that mistake!

You don't know what you're missing. Happens to me 2.7 times a year.

[mastertaxguy]

Direct deposit bank accounts

1. Would it be better if the taxpayer provided a check with the "current" routing number and account number?
2. Some software generates a direct deposit confirmation page for signatures. I find this very useful.
3. Engagement letters should specifically mention taxpayer responsibility for accuracy of direct deposit information AND keeping their account open until the deposit is made.
4. This is NEVER OUR PROBLEM/NOT OUR PROBLEM assuming we entered the information the client provided correctly.
5. In my practice, I have the client signed the item#2, and also initial, on their copy of the return, the direct deposit information.
6. If they don't have a copy of their check with them, I have another form for them to sign.

[Super Mom]

you don't know what you're missing. Happens to me 2.7 times a year.

unbelievable!!

[Koss]

Closed Account

Last year I had a client who wrote us a check on an account that was closed...

BMK

[tpnl]

Sign direct deposit form

We make all of our clients using direct deposit sign the direct deposit forms Drake generates. Which means, I have already entered the information and they are signing off it is correct. IF it is incorrect, that's on the client. We have had a few clients over the years close their account before the refund arrives. They usually understand it was their error and are not upset with me.

[taxea]

File a request for refund with an explanation...some banks deposit the money into a hold account rather than sending it back. The IRS will do an investigation, get the funds back and issue a check. Be sure to include the closed account number.

[JohnH]

If the client insists upon using a wrong checking account number, I have one they can use.