Once a tax return has been transmitted to the IRS, it cannot be altered unless it rejects. The IRS assumes no responsibility for incorrect routing or account numbers entered in the return, and if a direct deposit fails the IRS will mail a check to the address on the taxpayer's federal return.
Here are several common scenarios with bank information in a return and how they are resolved.
Scenario One
An incorrect account or routing number is entered in the tax return. The routing number passes the IRS validation check, but the designated financial institution rejects and returns the deposit to the IRS.
➤ The IRS will issue a paper check to the taxpayer for the amount of deposit.
Scenario Two
An account or routing number that belongs to someone else is incorrectly entered in the return and the designated financial institution accepts the deposit.
➤ The taxpayer must work directly with the financial institution to recover the funds.
Scenario Three
The taxpayer is utilizing a bank product to facilitate their refund and incorrect bank information was entered in the return.
➤ If the refund deposit has failed and reverted back to their bank partner, the preparer has two options: Contact their bank partner to see if they can assist in fixing the account information, or call TaxSlayer Pro support requesting the taxpayer's bank application be resubmitted to the bank with the disbursement method changed to a printed check.
➤ If the refund was deposited to an incorrect account, the preparer should contact their bank partner for assistance in getting the refund recovered.
Alternate Solutions
- If the return hasn't already posted to the IRS system, the taxpayer can ask the IRS to stop the direct deposit by calling 800-829-1040, M - F, 7 AM to 7 PM.
- Generally, if the financial institution recovers the funds and returns them to the IRS, the IRS will send the refund by paper check to the taxpayer's last known address on file with the IRS.
- If the taxpayer has contacted the financial institution and two weeks have passed with no results, file Form 3911, Taxpayer Statement Regarding Refund to initiate a trace. This allows the IRS to contact the bank on the taxpayer's behalf to attempt to recover the refund. Banks are allowed up to 90 days from the date of the initial trace input to respond to an IRS request for information.
- If funds aren't 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 the taxpayer and the financial institution and/or the owner of the account into which the funds were deposited.