The Internal Revenue Service sent millions of Americans’ stimulus checks to the wrong bank accounts in its rush to deliver them, tax preparers say.
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 now says it’s trying to figure out a way to deliver the bounced-back funds to 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.
“If the second Economic Impact Payment was sent to a temporary account that is closed or is no longer active, the IRS is currently working with our tax industry partners on options to potentially get these payment to individuals as quickly as possible,” the agency said in a Thursday statement. “More information will be shared when available.”
Tax-prep giant TurboTax said the payments could start landing in the right bank accounts “within days” now that the feds are working to correct their error.
The firm said Wednesday that “millions” of stimulus payments were affected by the problem but did not give a more specific estimate. The company added that it has confirmed that the IRS has the correct banking information for its customers.
The confusion appears to stem from temporary accounts that tax-prep companies set up to receive income tax refunds on their clients’ behalf.
Companies such as TurboTax and H&R Block open those accounts when customers choose to have their tax-preparation fees deducted from their refunds. But the accounts that were established for last year’s refunds are not currently valid, according to CBS News.
Problems may also arise for taxpayers who are using different bank accounts than the ones they had on their 2019 tax returns, 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.
An IRS spokesman did not immediately respond to a request for comment early Friday.