Refund direct deposited to Tax Preparer, then preparer cut a check to tax payer?

[FTS13]

Is it possible for you as the tax preparer to get the refund direct deposited into your account that you give the refund to the tax payer? I have heard of a local place around me that does that, but I wasn't sure if it was "legal".

I had someone come in who didn't have an address, he said he was pretty much homeless, didn't have a bank account or any other form of getting direct deposit, and of coarse didn't have money to pay my fees so in order for him to do his taxes, we needed to apply for the fee collect and fee collect requires a direct deposit, so I'm wondering if I can help him or not?

[cathyan]

NO! You can't have it go to your account. Have you looked into having his refund go onto a debit card? I know Visa has a prepaid card that you can have it put to.

[ljwalters]

No absolutely NOT.

[Terry D EA]

I agree NO! the Visa prepaid card is the only option or have them open an account with a credit union or some bank that won't have a large deposit to open requirement. I had a client (friend of ours) ask me to do the same thing in the past and NO! Doing this could cost you your business. Again, don't do it.

[JJStephens]

Check out Circular 230--page 24 Section 10.31: "A practitioner who prepares tax returns may not endorse or otherwise negotiate any check issued to a client by the government in respect of a Federal tax liability."

I'm reasonably sure having a refund direct deposited into one's account would be functionally the same as endorsing or otherwise negotiating that refund check.

[FTS13]

Thank you everyone!! I thought so, but just wanted to double check here with you guys!

[Guest Taxed]

Also be careful of tax prep sweat shops that will use a PO box for the client's address to get the refund check. We had one such shop in my neck of the woods years back. All returns that were done the previous year by this shop and all had the exact same address. Come to find out that the shop was dealing in high volume EITC taxpayers and picked up clients from the local shelters etc. These people did NOT have a permanent address and the PO Box was used to get the check and hold it there. Then they would have it cashed at walmart and the shop took almost 50% of the refund as fees.

Needless to say they have since disappeared.

[Jack from Ohio]

If you accept the refund in any manner, you go to jail, go directly to jail, do not pass GO, do not collect $200.

[jainen]

>>I'm wondering if I can help him<<

I think you should lend the poor guy $300 so he can open a bank account.

[MsTabbyKats]

I think the name and SS# have to match anyway....so in theory, a deposit should be rejected by the bank.

[Catherine]

I think the name and SS# have to match anyway....so in theory, a deposit should be rejected by the bank.

Nope; all the bank cares about is if the account number is live. And the bank in question is only identified by the routing number so they don't even know if they are the right bank.

[Jack from Ohio]

Nope; all the bank cares about is if the account number is live. And the bank in question is only identified by the routing number so they don't even know if they are the right bank.

A few banks do check and some are so picky that they would not let an IRS deposit in BOTH names be deposited in HIS account because her name was not on it.

Every bank has the option.

[Guest Taxed]

Nope; all the bank cares about is if the account number is live. And the bank in question is only identified by the routing number so they don't even know if they are the right bank.

Last year one of my clients gave me her account # by mistake to deposit her daughter's refund (different last name) and it went through. The mistake was only dis

[mrichman333]

This is from the IRS Q/A here is the link http://www.irs.gov/Individuals/Frequently-Asked-Questions-about-Splitting-Federal-Income-Tax-Refunds

Can I direct part of my refund into my tax professional’s checking or savings account to pay my tax preparation fee?
You can direct your refund to any of your checking or savings accounts; you cannot direct your refund to someone else’s account (except for your spouse’s account, if this is a joint refund).

Can I split my refund between a direct deposit and a paper check?
You cannot split your refund between a direct deposit and paper check.

[michaelmars]

I have a client, my wifes best friend who is not living in the states this year. he has no bank account and by the time he gets back to cash a check it will be stale. Plus he has to pay a check cashing service a fee. Any suggestions?, does anyone know if the debit card expires? His mailing address is my house do I can keep the card for him.

[HV Ken]

I discovered, by accident, how to use fee collect and get a paper check. Assuming you are enrolled in Fee Collect, select the option for "FeeCollect Diamond Plus Card". Then e-file as usual. The bank product will get rejected since you did not enroll for the diamond card, but since the e-file already has the bank routing number, the money will go there. The bank will then send you your fees and issue a check to the taxpayer. This is an undocumented feechur!