#Stimulus checks sent to 13M invalid bank accounts: tax firms

The Internal Revenue Service sent millions of Americans’ stimulus checks to the wrong bank accounts, tax preparers say — a mistake the feds are now trying to fix.

The agency “inadvertently sent payments to over 13 million bank accounts that are no longer open or valid,” forcing affected banks to return the money to the US Treasury, according to tax-preparation service Jackson Hewitt.

The estimate is the latest sign that the IRS’ rollout of the $600 coronavirus relief payments suffered from a large-scale glitch as the agency worked to distribute the money by Jan. 15.

The IRS said Friday that it’s working to get the misplaced funds into Americans’ correct bank accounts. That marks a shift from earlier this week, when officials indicated that unlucky taxpayers would have to claim the payments on their 2020 tax returns later this year.

“The IRS and tax industry partners are taking immediate steps to redirect stimulus payments to the correct account for those affected,” the agency said in a statement. “The IRS anticipates many additional taxpayers will receive payments following this effort.”

Tax-prep giant TurboTax said the payments would start arriving Friday in the right accounts of its “millions” of customers who were affected by the IRS’ error. Payments should be available the same day in most cases, though banks could take a few business days to process them, the company said.

“We know how important these funds are for so many Americans and we regret that an IRS error caused a delay,” TurboTax said in a blog post Friday.

The IRS said it has deposited more than 100 million stimulus checks into eligible Americans’ bank accounts since the money started going out last week. But problems arose for people whose checks were directed to temporary bank accounts that were set up when their 2019 tax returns were filed, the agency said. 

Companies such as TurboTax and H&R Block open those accounts when customers choose to have their tax-preparation fees deducted from their refunds. Stimulus payments may have also been directed to accounts established for people who used refund anticipation loans, short-term loans that consumers can take out before their refunds arrive, according to the IRS.

The IRS has not confirmed how many stimulus payments went to closed or invalid accounts, but the agency has admitted that some checks went to the wrong destinations “because of the speed at which the law required” officials to deliver them.