Coronavirus stimulus checks: Where is the missing money going? - Kaufman Rossin
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April 17, 2020 Unique Monthly Visitors: 54,718,020
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Coronavirus stimulus checks: Where is the missing money
going?
Americans are reaching out to tax preparers and lining up at their offices around the country to find out
what happened to their stimulus checks.
One answer: The IRS sent those missing payouts to an intermediary bank account if a client got an
advance on their tax return, tax professionals say.
Clients tipped tax preparers off to the problem when they used Get My Payment, the government’s new
stimulus deposit tracking portal, and uncovered that the payments of up to $1,200 for individuals were
sent to an account number they didn't recognize.
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April 17, 2020 Unique Monthly Visitors: 54,718,020
Agencies that help people file for government-issued refunds are receiving an influx of calls regarding
the one-time payout meant to be disbursed to 80 million Americans this week. While many people
received the deposit, other payments may have gotten inadvertently sent to temporary accounts
created during the tax filing process.
The IRS said it is moving to provide additional information and resolve any issues as soon as possible.
Where are stimulus checks going?
Natalie Parchment, a tax preparation consultant in the Washington D.C. area, has been inundated with
calls and emails from clients wondering what happened to their payout.
“I had to investigate,” Parchment said.
She discovered that the unrecognized digits that people found listed on the portal were linked to refund
transfers accounts, often created on behalf of taxpayers who want preparation fees taken out of refunds
so they don’t have to pay preparers upfront.
“Those last four digits on the Get My Payment portal match the transfer provider's information that has
been submitted to the IRS,” Parchment said.
rbb CommunicationsApril 17, 2020 Unique Monthly Visitors: 54,718,020
After you file your taxes with a tax professional, transfer banks such as MetaBank, Republic Bank and
Santa Barbara Tax Product Group set up temporary accounts for taxpayers who want a refund advance
or to deduct tax preparation fees from a refund.
That account number and the bank's routing number are sent off with the tax return to the IRS.
The IRS deposited some stimulus checks into these temporary accounts, according to MetaBank. "The
IRS has not explained to us why this error occurred," MetaBanks said in a statement.
Why are checks deposited in wrong accounts?
The issue has popped up among filers who have set up a tax advance in previous years when filing tax
returns, according to Toby Mathis, a partner and attorney at Anderson Law Group in Las Vegas, Nevada.
The IRS is basing stimulus checks off tax returns from 2018 or 2019, whichever is more recent.
A tax advance typically works like this: When a tax preparer does a filer’s return, they can loan them a
portion of their refund in advance. The IRS will then send the actual refund to the preparer via a bank
account set up in the filer’s name. The loan is repaid from the refund and the remaining portion of the
refund is returned to the filer.
Everyone from mom-and-pop tax preparers to big chains like TurboTax, H&R Block and Jackson Hewitt
have this option, Mathis said.
The issue is that the account where the stimulus payment was deposited didn't belong to the taxpayer.
It belonged to the service provider.
"The provider’s bank is supposed to refund the $1,200 payment back to IRS in these cases," says Evan
Morgan, tax director at Kaufman Rossin.
Those intermediary accounts tend to only be used for a filer’s refund in previous years, so those
accounts likely no longer exist. The IRS hasn’t given out specific guidance yet on how they will reissue
stimulus checks if they are deposited in the wrong accounts. But normally if a bank account is closed, a
tax refund is rejected and the IRS sends out a paper check to the address that was on the return.
What happens next?
Another possibility is a bank will return those funds if the money lands in the wrong account since the
name on the deposit didn't match the name on the person’s bank account, Mathis explained. If the
funds are rejected, the IRS would likely issue a paper check to the last address on file, he said.
“For people who have moved, that could be a big problem,” Mathis says. “People are already having a
heck of a time trying to update their information on the IRS website.”
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The IRS is expected to start sending paper checks on April 24.
"If a payment is returned to the IRS, the agency will mail a check to the taxpayer," according to the Santa
Barbara Tax Products Group which takes tax preparation fees out of refunds.
Who has been affected?
After people in San Antonio, Texas, complained about the missing checks to Snapback Tax Services, the
local agency blamed the IRS for the error.
"The information that many of you are seeing on the IRS website is your account information to
MetaBank. They are the bank that processes your tax refunds," Snapback Tax Services said on Facebook.
In Augusta, Georgia, dozens of people crowded Citi Tax Financial, thinking the tax preparer was
responsible for lost checks, according to local media.
A similar event unfolded in Tallahassee, Florida, this week after confused residents stood outside of
Galaxy Tax Services with tax papers in hand.
H&R Block, the tax preparation company, said its clients were impacted by the confusion the IRS
created.
"We share our clients’ frustration that many of them have not yet received these much-needed
payments due to IRS decisions,'' the company said in a statement provided to USA TODAY, "We are
actively working with the IRS to get stimulus payments sent directly to client accounts.''
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