I focus my practice on tax resolution, representing taxpayers in Colorado, Florida, Texas, New York, California and elsewhere. An unfortunate common mistake that happens when you prepare your tax return is recording the banking information for direct deposit refunds incorrectly.

Taxpayers need to be extremely careful when entering the banking and routing numbers for direct deposit refunds. If you enter the wrong number, obviously the refund will not be hitting your bank account. There are a couple of steps that you can take:

  • If the return hasn’t already posted to the IRS system, you can call them and ask to stop the direct deposit.
  • Generally, if the financial institution recovers the funds and returns them to the IRS, the IRS will send a paper refund check to your last known address on file.
  • You can file Form 3911 after two weeks to initiate a trace.

If funds aren’t available or the bank refuses to return the funds, the IRS cannot compel the bank to do so. The case may then become a civil matter between you and the financial institution and/or the owner of the account into which the funds were deposited.