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https://www.irs.gov/businesses/small-businesses-self-employed/webinars-for-tax-practitioners The IRS offers the upcoming live webinars to the tax practitioner community: Energy Efficient Home Improvements Credit & Residential Clean Energy Property Credit: How the Inflation Reduction Act revised these credits on Nov. 14, at 2 p.m. ET. Earn up to one continuing education credit (Federal Tax). Certificates of completion are being offered. Beneficial Ownership Information Presented by Financial Crimes Enforcement Network (FinCEN) on Nov. 19, at 2 p.m. ET. No continuing education credit is being offered.

We have the client initial by the account and routing number and sign the and date the "Account Transaction Summary" page.

You should definitely refund the first client right away and then get the money from the second client. It was your mistake, so it's on you to fix.

So, IRS has their money? Why not pay client that the account was dinged the amount plus an extra amount for the error? Then have client who should have paid IRS pay you.

All of the above was taken from a topic where the poster had used another client's banking information for a direct withdrawal. I've edited and moved those portions of the comments to this topic for best practice for using and verifying clients' banking information.

Yeah, I would’ve ignored it too. People can be so entitled sometimes.

You should immediately reimburse the first client and then collect the money from the other client. It was your mistake.

That would potentially solve the penalty issue, and while it may not be an ethical violation to take the client's funds in payment of their tax bill like it is for preparers to negotiate deposits of refunds, I think the client that should have paid would be suspicious and would want proof that the taxes were actually paid if their payment was to the preparer and not the IRS. Plus, the preparing firm shouldn't want its funds mixed up with those of clients in any way, and there's no way for correct client to pay harmed client directly without divulging harmed client's name because that would be an ethical violation. Either way, both clients will be unhappy no matter what the solution is. Hopefully for the OP, the disgruntled client wasn't angry enough to contact IRS with a complaint of preparer error, and if they did, that the agency would see this as an innocent mistake, but we don't know that because we are supposed to be safeguarding information like this.

Has the incorrect client with money withdrawn contacted their bank? That is a start, because that bank should have refused if the name IRS was using didn't match the account information. Next, below is a link to an IRS page for payment options, and at the bottom is a section for cancellations, errors & questions, and that section contains a phone number that may have someone to provide additional guidance. I do know that with errors such as this that involve direct deposits of refunds, the IRS clearly states that it takes no responsibility for incorrect information supplied to the agency by taxpayer or preparer. https://www.irs.gov/payments/pay-taxes-by-electronic-funds-withdrawal At a minimum, your firm should pay or share in any late payment penalties and the amount charged for the invalid returned payment (like the returned/bounced check fee).

I had an unknown lady call and leave a message that she wanted me to call her back - she called on Monday evening. I ignored the call as I was busy, the caller ID just said it was a wireless number, every other word was garbled on her message and I thought it was a scam. She called yesterday late afternoon and acted all high and mighty that I hadn't returned her call promptly.