How Will I Get My CARES Stimulus Payment if my Preparer Paid My Refund?

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Today we welcome guest blogger Connor Moran. Connor practices business, estate, and tax law at the Portland, Oregon firm of Kell, Alterman and Runstein, including both planning and controversy work. He was previously a Senior Attorney at the Internal Revenue Service Office of Chief Counsel. At the University of Washington law school he volunteered as VITA tax preparer in Alaska for Native Fishing Communities as well as local communities in Seattle picking up his interest in assisting low income taxpayers. He writes today about one of the many issues that arises in connection with the rebate check and one that can prevent low income individuals from getting their check or cause them much effort to obtain it. Keith

Update: On April 21, 2020, the IRS released more information on this issue. The IRS states that in some cases, the payment may be loaded onto a prepaid debit card, just as the refund was. In other cases, the bank will reject the deposit and return it to the IRS. The IRS will process the payment and mail payment to the most current address the IRS has on file for the taxpayer.

The IRS also noted that a due to a reporting error the “Where’s My Payment” app sometimes stated that rejected payments were going to the same account a second time. According to the IRS, these payments were in fact to be mailed as checks  and not re-sent to the closed account.

If you experienced this issue and were not aware that your refund was paid through your preparer, you may reconsider your choice of preparers in the future. IRS and banking rules require clear disclosure of the use of these products and any associated fees. For many taxpayers, IRS FreeFile, available through the IRS website allows you to file without the fees associated with commercial preparers.

As most Americans know by now, the CARES Act instructs the IRS to send every non-dependent with a social security number a payment of $1,200 for an individual ($2,400 for a married couple), with an additional $500 for each child. The payments phase out for people with income over $75,000 for an individual or $150,000 for a married couple.

In order to get the money to you as soon as possible, the IRS will direct deposit the stimulus payment if the IRS knows your bank account. The IRS will rely on the bank account information reported on a taxpayer’s 2018 or 2019 income tax return in order to quickly deliver the checks to intended recipients.  For taxpayers who have not yet filed an income tax return for 2019 or for whom the filed 2019 return has not yet been processed, the IRS will use the information from the 2018 tax return, if filed.

The IRS is rolling out a “Get My Payment” application for taxpayers to enter direct deposit information if it’s not already on file, but reportedly this app cannot be used to update existing bank account information. The IRS’s description of Get Your Payment states that it will allow taxpayers who have not provided direct deposit information to provide bank information, but does not indicate that it will allow taxpayers to change information the IRS already has on file.

This raises a critical issue for the more than 21 million taxpayers who received refund anticipation checks, also known as refund transfers. This number comes from page 15 of an April 2019 GAO report addressing tax refund products.  If you received your refund from your preparer instead of from the IRS, whether as a check, as a prepaid debit card, or to your account via a bank rather than directly from the Treasury, this likely includes you.


This issue generally arises when a low income taxpayer goes to a paid preparer and lacks the money to pay the preparer for the cost of preparation and/or wants the refund immediately rather than waiting for the IRS to deposit the refund in their bank account, if the taxpayer has one, or receipt of a paper check. Rather than pay up front for tax preparation services, the taxpayer agrees to let the preparer set up a temporary bank account into which the IRS will deposit the tax refund. Tax preparer fees are deducted straight from the refund, and the preparer either gives the taxpayer a check up front or a prepaid debit card that will be funded when the refund arrives.

See the problem?

If you used one of these services, the IRS doesn’t have your bank account information, but it maybe thinks that it does. The bank account numbers belong to a temporary account that does not belong to the taxpayer, and may no longer even exist.

This problem overwhelmingly affects low-income taxpayers who likely need these payments the most desperately.  While the IRS makes efforts to track when such products are used by taxpayers, the indicators used by the IRS are not without flaws.

Unfortunately, we simply don’t know how the IRS is handling this issue. If the IRS treats these temporary accounts as closed accounts, you would receive a check instead of direct deposit. As of April 9, 2020, one bank that works with many tax preparers to issue these checks and prepaid debit cards indicated that persons who used these services will receive checks from the IRS. The paper check is better than nothing, but means waiting months for money people need now.

Worse, the IRS may actually deposit funds to the accounts. As yet, the companies associated with these services have given no information about how they would handle such deposits. Given the industry’s track record, it is likely that such deposits would mean that money desperately needed by low-income people affected by the coronavirus will be subject to unnecessary fees.

What can taxpayers do?

Taxpayers who haven’t filed for 2019 can file for 2019 and provide their own bank account information, if they have a bank account. The vast majority of affected taxpayers qualify for free tax preparation through IRS Free File, MilTax, or Coast Guard benefits.

What should the IRS do?

From the IRS, ideally the Get Your Payment app would allow us to update direct deposit information the IRS has on file as well as add direct deposition information when the IRS doesn’t have it. Unfortunately, as Nina Olson wrote in her earlier post on Procedurally Taxing, the IRS is starved for resources, hampered by the pandemic, and working with an ancient computer system.

If the IRS cannot give us a way to update our information, at least it should provide guidance so we can predict and plan accordingly.

What should the tax preparation industry do?

From the tax preparation and tax financial service industry, we need an immediate commitment that they will loudly inform all customers filing now that using these products may delay or divert stimulus payments.

For customers who can’t pay up front for tax preparation services, the tax preparation industry must commit to informing taxpayers of free alternatives like IRS Free File and MilTax.

We also need commitments that preparers and banks will immediately forward any stimulus payments they receive to the intended recipients, without additional fees.


  1. Nancy Ryan says

    Thank you so much for this Post. I’ve been assuming that taxpayers would have the opportunity to correct their banking information when the “Get Your Payment” part of the Web Portal launches on Friday, and this is eye-opening. I’ve passed this Post on to a Washington Post reporter who is doing an article on how the shutdown is impacting low income taxpayers with your suggestion that IRS give people the opportunity to change their bank account info. Who knows? The IRS has made a lot of quick changes in the past month in response to information like this–maybe you just helped 21 million taxpayers get their money quicker!

  2. The questions from taxpayers to commercial tax preparation companies further illustrates the confusion on this particular issue. For example, see the responses from TurboTax on their customer page to the question “Will my stimulus check get deposited in my TurboTax prepaid card account?” :

  3. Bob Romeril says

    It would seem that in the spirit of helping people access their refunds sooner, tax refund lending (payday lending once a year) and paying for tax preparation have assembled a process which does not permit the currently contemplated additional use of the tax return bank information and to my mind, are not in keeping with the guidance in Circular 230;
    § 10.31 Negotiation of taxpayer checks.
    (a) A practitioner may not endorse or otherwise
    negotiate any check (including directing or accepting
    payment by any means, electronic or otherwise, into
    an account owned or controlled by the practitioner or
    any firm or other entity with whom the practitioner
    is associated) issued to a client by the government in
    respect of a Federal tax liability.
    (b) Effective/applicability date. This section is
    applicable beginning June 12, 2014.

    Maybe these processes should be re-engineered to contemplate future occurrences so as to protect taxpayer receipt of government issued funds that no other entity is entitled to receive.

  4. Steve Milgrom says

    I alerted Nina Olson to this problem via email on April 3rd and asked if she could alert someone at the IRS to the problem. While I haven’t heard back from her, I’m hopeful she made sure the IRS was aware of the situation. While a check from the IRS is not the perfect solution it is likely much better than the IRS trying to deposit money in one of these temporary accounts.

    • This afternoon Chi Chi Wu from the National Consumer Law Center who follows issues like these closely posted the following message on the ABA Pro Bono and Tax Clinics listserv: “So I just got this update unofficially – It looks like the IRS will be able to make direct deposits of stimulus funds for a significant percentage of taxpayers who received RACs or RALs for 2018/2019. Apparently, returns with a RAC/RAL do often include bank account information in addition to the temporary disposal account used to receive the RAC/RAL. This is called an “ultimate bank account”, and we have been told it exists for the majority of RAC/RAL recipients. We have been told that the IRS/Treasury has made the decision to allow direct deposit into these accounts
      For a minority of RAL/RAC recipients, their RAL/RAC funds are disbursed in the form of a paper check or prepaid card. Unfortunately, these folks will receive a paper check for their stimulus payment.”

      • Jonathan Williams says

        So this Morning April 15 I went on filled in the required information saw that my stimulus check was sent but the account number was not mine it was the account of the tax preparer, I immediately called her and she said since we owed a fee during tax time and could not pay the income tax went to that account so she could draw her money and then to me. So that is why the irs had her bank account number and not mine. So what will happen next ?

        • Did your tax prepare give you your money owed? My tax preparer has mine and has been post poning my checks

  5. Milo Larson says

    My spouse and I have not filed our 2019 tax return, but did so in 2018. We overpaid in 2018 & checked to have the amount applied to our 2019 taxes. We have our social security checks automatically deposited but that information is not on our tax return. I filled out the info on the Get My Payment for my stimulus check but there were only circles for a refund or payment in 2018. I checked refund but when I submitted the form it wasn’t accepted because I hadn’t actually received a refund. Do I need to give up on the direct deposit and wait for a paper check?

  6. How, could’ve received my stimulus if my refund was paid to me from the taxes preparators l dont know why they do it like that they did not give me any explanation of how they do the filling of your taxes or whay system they have. . .

  7. ######@Watch these tax preparer they are really sneaky you will owe for fees you had no clue about. $I was bamboozled 2019. First I look over my tax papers to see this lady got a 1800.00 advance, charged me $900 fee to do my taxes. Myself my niece and brother I own nothing and no businesses. $900.00 So then in May the prepaid card she used 1100.00 from my stimulus check to pay off the fees. The bank never posted that my 1700.00 stimulus check even hit the account. Today Nov 30,2020 I find out there was no information on my bank statement of any EIP because the IRS doesn’t use info for the pay out. So no where on my account was I informed that this payment even was deposited. I got $600 and it said tax refund payment not stimulus so since June I have been telling IRS I never got my payment. Is this legal that a bank can take your money but not post that it deposited and they took it for tax preparer fees. No notice at all?????????????????????????

  8. Alisa Jeanette Whitley says

    I have been dealing with the IRS since my stimulus money was deposited into my tax preparers bank account. First, the IRS said that they was going to put a trace on my refund. I never heard anything else. Based on the IRS website it said that my refund of $2,200.00 was deposited into the account ending in 2008. I looked back over my tax papers to quickly find out that my tax preparer did in fact get my stimulus payment. Detectives came to me to inform me that my tax preparer Kristina Gibson Long had been charged with 19 counts of identity theft, 19 counts of preparing taxes by a non preparer. She was incarcerated under a $505.000 bond. She has been released and I still have not received my refund. I have made countless attempts to reach the IRS to resolve this issue with no luck at all. The IRS said that I needed to contact the bank that the money was deposited on. I am a single mother of 3 that works all the time to not even make ends meet. I feel that the IRS has failed me terribly. If anyone reads this article and has any suggestions or ideas, please let me know. Thank you in advance and God bless!

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