Submitted by R. Neal on Fri, 2008/05/09 - 12:28pm

WBIR:

Taxpayers and tax preparers are discovering that anyone who elected to have tax preparation fees deducted from their tax refund will not receive rebate checks via direct deposit.

The problem relates to funds being routed to the tax preparer's third-party bank.

UPDATE: Based on the additional information in comments and thinking about this a little further, the IRS is handling this exactly right.

What it boils down to is that some taxpayers, either by getting a refund loan or having preparation fees deducted from their refund, had the third-party preparer's bank account listed as their direct deposit bank, and the third party is then responsible for disbursing the funds to the taxpayer.

In the case of the "rebate," the third party preparer may not be setup to accept it or disburse it, so the IRS is doing the only other thing they can do which is to mail those taxpayers a check directly instead of depositing it in some tax preparer's bank account.

So this sounds like one of those "that's a feature, not a bug" situations, and the right thing to do.

UPDATE: This and other questions answered in a recently updated IRS Economic Stimulus Payments FAQ.

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bizgrrl's picture

Also, in the Orlando

Also, in the Orlando Sentinel,

The IRS will not direct-deposit a rebate check for people who filed an electronic return through a private tax preparer such as H&R Block or Jackson Hewitt and got a loan in anticipation of a refund.

reform4's picture

Oh, George W. Bush....

..is there ANYTHING your administration can't screw up???

Anonymous's picture

Very enlightened comment.I

Very enlightened comment.I sure would prefer my check to be direct deposited to someone elses bank. Wake up.

Anonymous's picture

Mine was due today because I

Mine was due today because I filed online but because I had HR Block take the money out of my refund now I don't get it till 7/4. Doesn't make sense when the refunds came fast. Thank God I hadn't spent it yet anyway because of the economy it will only go for bills anyway :(

Justin's picture

Use Turbotax or one of the

Use Turbotax or one of the free E-file options. HR block is worthless. If you need to pay someone to help with your taxes find a real CPA.

Anonymous's picture

If you used turbo tax, they

If you used turbo tax, they also are unable to get your rebate check back to you sooner, it iwll come in the mail..I guess I needed to use a credit card to pay for the handling of my return..instead of having turbo tax take it out of the return..a BIG screw-up...

Simple Jess's picture

I understand the why behind

I understand the why behind the decision the IRS has made, but what irks me is this:

I tool out a RAL for my return since I was leaving for vacation in 2 days and needed the $$. In the payment section, where it discussed fees, etc. It actually talked about the Stimulus Payment and told me that I should verify my bank info for the direct deposit of said payment. At the time, I tried finding information on specifics that would delay my payment, or cause it to be sent via check. Nothing was found. Just the calendar that showed who was getting their payments when.

I made a very big financial obligation based on the fact that I was getting direct deposit on the 16th, an NOW I find out I will be mailed a check on July 4. I highly doubt the government will actually mail anything on a national holiday, and given the 7 days it normally takes snail mail to reach me, I should now receive it by July 12 ( assuming they mail it in the 5th).

I really wish they would have made this information available sooner so honest, hard-working people (like myself) don't get raped, once again, by our wonderful government.

Anonymous's picture

Here's an idea; Don't spend

Here's an idea;
Don't spend money that you don't have yet. I hear of all these people that are mad at the government because they did not get their check 'on time'. The way I see it, we are lucky to get one anyway. I was supposed to get mine on May 9th, direct deposit, but since I had the third party take out, it will come somtime in June. I'm fine with that because I didn't spend it already nor am I waiting for it to come so I can spend it.
Wake up people, not everything is the governments fault, they didn't make you spend it before you go it.

Anonymous's picture

Getting Real

Ya ill admit its nice to be getting a check out of nowhere, but if the government, our government, promisies the working people of america a little money relief in this second great depression, I would expect them to follow through. Wouldn't you? My point is not everyone can save their money because not everyone has it easy. People depend on those refunds and stimulus checks to help keep food on the table and a roof over their heads just because of this crap economy. Common people, get real!!

Nobody's picture

Hey Getting Real You live in

Hey Getting Real You live in a society where everyone thinks the world owes them. In Canada, there are no STIMULUS checks or subsidies like you get, and everyone actually works for what they get. Nobody has it easy, so get off your ass and do something about it and stop waiting for a handout.

flavio's picture

what happens if i did my

what happens if i did my taxes myself on taxact.com and my direct deposit was due on the 16th and i have not received it yet. would that apply to me also.

Anonymous's picture

I have the same problem. I

I have the same problem. I received the second letter from the IRS showing I would receive the refund electronically deposited and that it would be by 5/16/2008. It is now 5/19/2008 and I still haven't received the money. I did my taxes on HR Block website through the free file link on the IRS website.

Stan G's picture

The Issues

There are two issues involved here. First, the IRS does not send refunds to commercial tax preparation firms; when a taxpayer asks to have the fees withheld, the four or five banks in the country that process refund checks will create an individual account for the taxpayer. When the bank receives the refund, it will either issue a check electronically to be printed at the tax preparer's office or it will direct deposit the balance to the taxpayer's personal bank account. At that time, the account is closed. It would appear that when the IRS sent out the initial payments as direct deposits, the accounts were closed and the payments could not be processed; consequently, the IRS had to switch to Plan B and to schedule those deposits for payment by check.

The second issue that was not made clear when the payment schedule was announced was the fact that the schedule only applied to those tax returns that had been processed by the IRS by April 15. For those taxpayers who filed in April, earlier if a paper return was filed, the published schedule does not apply.

Anonymous's picture

no rebate yet

my son was to get his rebate check on 5/16 that what my computer gave us as the date to be deposited in his account now it does not have any info on his at all real nice work our gov. does they could have told us that there would be delays because of filing on line this really stinks

Tax man of alaska's picture

Still waiting

I am tax professional with liberty tax service, having done over 3000 tax returns personally since 2003. This whole rebate blind sided all of us in the business. My office, in a effort of community service prepared and filed tax returns for people who were not required to file but needed to file just so they could get there stimulus check at no charge.

I have lost track of how many clients have called my office blaming me for Stealing there rebate check due to shoddy reporting by the media suggesting any of us are making money off of this. To make it even worse it’s been reported that the IRS still direct deposited over 15,000 stimulus checks the wrong accounts, including my personal one.

http://www.newsday.com/news/local/longisland/ny-listim0515,0,1840951.story

Or even shorting the expected checks
http://www.bnd.com/267/story/341464.html

Or my favorite one so far. Some people are getting bigger stimulus checks that as of yet, they are not being required to pay back!
http://www.cfosnafu.com/irs-glitch-doubles-refund-for-lucky-few/

But there have been quotes “tax prepares just keep getting richer, and taxpayers a paying for it”. Between my donating the free preparations (I stilled paid my staff for the work they preformed) and upset customers demanding a refund of the Preparation service fees. This has only COST ME money.

redmondkr's picture

My lump was deposited, as

My lump was deposited, as predicted, on the sixteenth. Two days ago I got a form letter telling me that I could expect a direct deposit on or about the sixteenth.


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bizgrrl's picture

Ya gotta love the gubmint.

Ya gotta love the gubmint.

Anonymous's picture

Stimulus payments

I do not think , George W. Bush or the IRS knws what they are doing this has been a total disappointing , is a mild version of what chaos it has caused people...... What are we to do next month ?

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