The information packet arrived in a neatly labeled brown paper envelope. It would become the fourth tax return of the season, but initially it was just a neat collection of papers with a blank deposit slip clipped to the top.
I was expecting this particular packet, in that I had discussed the matter with the sender a few days earlier. We had not discussed the direct deposit, however this was not unusual or unexpected. This taxpayer had requested a direct deposit for the prior two years.
What was unusual was the routing number. I immediately noticed that the routing number on the attached deposit slip did not match the routing number in my records, though the account numbers did match. That was strange. Further review revealed that I had acquired the routing number in my records several years ago from the bank itself. The taxpayer had faxed me a deposit slip that "didn't look quite right", and I had called the bank. Now I had a new routing number that did not agree with either of the older numbers.
I could have called the bank, but I called my client instead. I was having some doubt as to the value of this process. Was a potentially quicker refund worth the hassle and risk involved in getting it?
The problem is this:
The IRS has a duty to direct deposit a refund as requested on the taxpayer's tax return. It has neither a duty nor the ability to confirm ownership of the account. Further, the ability of the IRS to retrieve an errant deposit is strictly limited. Simply put, if we used an incorrect routing number and thereby sent the deposit off into the electronic ether we could expect little or no help from the IRS.
The recipient bank has a duty to apply the deposit to the correct numbered account. The recipient bank also has no duty to confirm ownership of the account. Further, pursuant to the Right to Financial Privacy Act, the bank has an obligation to protect the privacy of its' customer. Simply put, even though we might know what bank the deposit went into, we could not expect any help from the recipient bank in determining who received the money.
While the bank might choose to inform its' customer of the misdirected deposit and might also offer to assist in correcting the matter, it might just as well choose not to do either. Also, its' customer might choose not to be bothered. In either case the misdirected deposit might very well be beyond the reach of it's rightful owner.
After listening to some portion of my arcane commentary, my client made her decision.
Request a paper check.