Direct Deposit

The taxpayer's name must be on the bank account, otherwise a check will be mailed.

I raised this question at the IRS Taxforum in NY last summer at a presentation by IRS staff. I was told that the IRS does not check the name. As long as the account and routing number combination exist, the refund will be sent to the account.

However, it may be the bank practice to do additional checking and the bank may reject the transfer if the name or id number on the refund does not match the information associated with the account.

If I were entering a third party account, I'd warn the client that they might end up getting a paper check.

Last year the client insisted that I enter his mothers bank information for the direct deposit, it didn't work the client recieved a paper check, but like you say, that may have been the bank that rejected it and not the IRS.So if the client insist, that is the way it will be..

What happens if a client gives you the correct routing number but the wrong acct number for direct deposit? If it is returned to IRS will they issue a paper check and how long will it take?

At least 6 weeks, probably 8

See Page 17 Pub 1345

Has anyone out there had trouble with large refund amounts when requesting direct deposit? A client had one over $11,000.00 with a direct deposit account number/routing number we've used successfully for years (with smaller DD refund amounts). They were mailed a check instead with no explanation.

If this is a problem, can it be circumvented by splitting the deposit out to two accounts?

I might be way off, but I wonder if it has to do with the Patriot Act & the amount being over $10,000.

I've seen that same thing. Apparently the IRS has some cap for a direct-deposit. I don't think it's published anywhere, but it seems to be about $10,000 or $11,000 or thereabouts. For any clients that are expecting a refund of $10,000 or more, I always brief them that the direct-deposit may be converted to a paper check. If you tell them up front, everything is fine. If they're blindsided by it, they think you messed up.

It is an interesting point that someone brought up about possibly circumventing the cap by breaking the deposits into more than one account. If anyone tries that, please post the results.

I just talked to a client today who was scheduled for a $39,000 Federal direct deposit. He got it on schedule according to the IRS cycle chart. Maybe the different IRS regions have different policies.Or maybe there is a classified listing under the Patriot Act that affects some people but not others.

According to the FMS, refunds over 10,000 can be direct deposited.