Finally - Direct Deposit Limits

[Lee B]

This is way past being overdue and will at least limit some of the worst fraud!

 

Direct Deposit Limits

In an effort to combat fraud and identity theft, new IRS procedures effective January 2015 will limit the number of refunds electronically deposited into a single financial account or pre-paid debit card to three.

The fourth and subsequent refunds automatically will convert to a paper refund check and be mailed to the taxpayer.

Taxpayers also will receive a notice informing them that the account has exceeded the direct deposit limits and that they will receive a paper refund check in approximately four weeks if there are no other issues with the return. Taxpayers can track their refunds at Where’s My Refund?

The vast majority of taxpayers will not be affected by this limitation, and we would encourage taxpayers and tax preparers to continue to use direct deposit. It is the fastest, safest way for taxpayers to receive refunds.

The direct deposit limit will prevent criminals from easily obtaining multiple refunds. The limit applies to financial accounts, such as bank savings or checking accounts, and to prepaid, reloadable cards or debit cards.

However, the limitation may affect some taxpayers, such as families in which the parent’s and children’s refunds are deposited into a family-held bank account. Taxpayers in this situation should make other deposit arrangements or expect to receive paper refund checks.

The new limitation also will protect taxpayers from preparers who obtain payment for their tax preparation services by depositing part or all of their clients’ refunds into the preparers’ own bank accounts. The new direct deposit limits will help eliminate this type of abuse.
Direct deposit must only be made to accounts bearing the taxpayer’s name. Preparer fees cannot be recovered by using Form 8888 to split the refund or by preparers opening a joint bank account with taxpayers. These actions by preparers are subject to penalty under the Internal Revenue Code and to discipline under Treasury Circular 230 (also, see Circular 230 Tax Professionals page

[ILLMAS]

Yes that was one of the topic discussed at the nationwide IRS tax forum, also the refund cannot be directed to the preparers account.

 

MAS

[Jack from Ohio]

Yes that was one of the topic discussed at the nationwide IRS tax forum, also the refund cannot be directed to the preparers account.

 

MAS

This part has been law for decades!!  Seems that those unscrupulous preparers don't care.  I don't think the IRS will know or be able to stop this, without having a database of every preparer's bank account numbers.  Since they cannot keep e-mails, I doubt if this database exists or ever will.

[mrichman333]

This part has been law for decades!!  Seems that those unscrupulous preparers don't care.  I don't think the IRS will know or be able to stop this, without having a database of every preparer's bank account numbers.  Since they cannot keep e-mails, I doubt if this database exists or ever will.

 

A database.  LOL at the IRS lol that WORKS lol

 

If they can get a database I would suggest that no more then two refunds be able to be sent to a single foreign address.  Refunds with a China or some third world country address should be carefully scrutinized. 

[taxxcpa]

I don't see how this would stop people from having a joint account with a tax preparer.  But even if it did, the client could give the preparer his account information and log-in codes, then the preparer could transfer part of the money to his own, separate accouint.

[joanmcq]

Or getting more than one debit card. The ID thieves have been caught with dozens of debit cards.

[Jack from Ohio]

I contemplated this and here is how it will stop preparers from using their own accounts to get paid.

 

They will be able to do three, then any other refunds will go to the taxpayer in a paper check.  This will be tracked by the RTN and ACCT# of the bank account.  After three, no one will be able to direct deposit to that account.

[kcjenkins]

I don't see how this would stop people from having a joint account with a tax preparer.  But even if it did, the client could give the preparer his account information and log-in codes, then the preparer could transfer part of the money to his own, separate accouint.

I don't think many clients would ever consider that.