Direct Deposit of Refund

[Bonnie]

[]in the first place; it's department of treasury that issues checks.

We are discussing direct deposit. There is no check. This is all done electronically. There is no allowing or disallowing it. It happens automatically if the account is there. If not is bounces back. I saw this happen a few years back. Customer closed account before the tax refund arrived electronically. It bounced back and forth between IRS and the bank. The rule used to be the IRS would sent it electronically 3 times and if after that the bank could not find the account, it would go back and a check would be mailed to taxpayer. In this case, account wasn't there but funds remained with the bank somehow but they couldn't find a record of it. It took years but finally got straightened out. Needless to say, this customer doesn't do direct deposit any more. It will go into any account you list. I've seen it go to an account that doesn't even have the taxpayer on it. Again, it goes electronically by routing and account number.

Bonnie

[Black Bart]

I think you made the smart choice

Due to the circumstances of a pending separation and divorce, and the fact that the business account is in the name of the husband and partner, I have advised the client that it SHOULD NOT be done, and that it might be possible the bank will not make the deposit.

So I suggested that he supply a joint checking account with the soon to be ex spouse or in lieu of that receive a paper check.

Thanks everyone for your thoughts!

Sandy

under the circumstances, but here's a couple of relevant quotes from IRS Publication 1345 about the subject.

(1) As to whether or not it's the right thing to do: "Qualified accounts must be held by financial institutions within the United States and established primarily for personal, family, or household purposes." That seems to lay to the rest the question of IRS approving business account deposits, but I agree with the others that there's a very good chance the bank would accept it anyway -- I believe most banks will take anything with a correct routing/account number.

(2) As to who controls; bank or IRS: "Taxpayers should be cautioned that some financial institutions do not permit the deposit of joint individual income tax refunds into individual accounts. The IRS is not responsible if Direct Deposits are refused for this reason." This isn't the same as the question you asked about using a business account, but it does indicate that it's up to the banks rather than IRS to decide if they want to accept it.

[Jesse]

Thanks Bart - I find that interesting and I guess that's the IRS's way of putting the blame on someone else if it does not go into a joint account. Although that is the last question I always ask I wish my software printed the account # on the Form 8879 as both spouses sign a form that has the number on it.

[muddin001]

IRS does not care whose account it is, all they care about RTN and ACN. So go for it..i have done numerous time where I have include person to busincess account, and personal to relatives personal account. So w/o any confusion you can definately use business account #.

[BP.]

I wish my software printed the account # on the Form 8879 as both spouses sign a form that has the number on it.

What about p. 2 of the 1040? Spouses sign just below the DD info printed there.

[Jesse]

That is where I refer when I ask them if this is the correct account # for direct deposit, but I do not make them sign that, I guess I could.

In past years I always printed out the Form 8453 and made all sign both the 8879 and 8453 as the account number was on that form. Even though it was not required and I did not have to send in the 8453 the client still signed a form w/ a number to verify the account information.

But I've heard other preparers comment that the number actually prints out on the form 8879 and I like that idea.

[Jesse]

IRS does not care whose account it is, all they care about RTN and ACN. So go for it..i have done numerous time where I have include person to busincess account, and personal to relatives personal account. So w/o any confusion you can definately use business account #.

Although you can does not make it right.

[ChEAr$]

bank account numbers

That is where I refer when I ask them if this is the correct account # for direct deposit, but I do not make them sign that, I guess I could.

In past years I always printed out the Form 8453 and made all sign both the 8879 and 8453 as the account number was on that form. Even though it was not required and I did not have to send in the 8453 the client still signed a form w/ a number to verify the account information.

But I've heard other preparers comment that the number actually prints out on the form 8879 and I like that idea.

My software does not print account numbers on the 8879, and that's a good thing, I think.

My procedure is to finish everything and print out client's copies. Then I will input the
bank account numbers so that the only place they occur in my office in in password
protected computer files. Never print them on paper. It's bad enough we print summary
records of clients' SSN in our files.

[FEDUKE404]

This has been an education!

WOW! - In the distant past I've endured a lot of clients who eventually received checks instead of expected bank direct deposits. Most of the time it was due to H/W not BOTH being on the acct (W + mom, H + child, etc). If I am interpreting what most people are saying, i.e. anyone could deposit money into my account (and also take it out?) with two magic numbers, I feel like Rip Van Winkel after a very long nap. I cannot believe there is not some kind of "talk" between the computers if bank information is incomplete, but other than common sense I have no facts to support that observation.

A couple of comments: 1) Some state equivalents to Form 8453/8879 DO show the bank information on that form (or at least they did last year!). 2) As a professional, I have a bit of a problem with "I didn't make the client sign that" relating to the numbers on page 2 of Form 1040. If they are e-filing, Form 8879 Part II should cover that. Since it's in all likelihood MY behind that is in dire straits with wrong numbers, paper return or e-file, I also have a separate worksheet that I require the client to sign. The worksheet shows the name of the bank (info only), the RTN, and the DAN, and if a future debit is authorized the date of such debit. There is also a caveat on that form that the funds must be in the account on that date. I enter the e-file/Form 8888 numbers from that sheet, and maintain it in my client file.

Call me stubborn, or call me careful, or call me overly CYA-ing, but wrong bank accounts could create problems, and now more that I ever thought before!

FE

[BOB W]

When a client first comes in the first thing I do is go over the general client info, then review dependents, and finally review DD info. I usually make a comment about DD and how important it is that they did not change that account during the year. I wait for a solid yes. That is CYA.

[Gretel]

That is CYA.

What is CYA?

[ChEAr$]

explanation

What is CYA?

That's an old accounting term (grin), meaning "cover your assets."

[FEDUKE404]

That derriere thing again

When a client first comes in the first thing I do is go over the general client info, then review dependents, and finally review DD info. I usually make a comment about DD and how important it is that they did not change that account during the year. I wait for a solid yes. That is CYA.

Agreed, but my aforementioned document also "provides proper coverage over my donkey" for authorization of debits in any balance due scenarios. Sometimes some clients have very selective recall - "I never told you to do that!" etc. There is also a different procedure for state balance due payments (cannot be done as part of actual tax filing) that I perform as a no-fee service for my clients if they wish me to do so......most do!

FE