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Call 4 Action Clears Up IRS Refund, Stimulus Check Confusion

POSTED: 5:13 pm EDT May 14, 2008
UPDATED: 6:11 pm EDT May 14, 2008

Thousands of you who thought you should have already received your tax rebate check through direct deposit might have to wait another month for your money.

The IRS said if you received your tax refund through direct deposit, your economic stimulus rebate would also be sent through direct deposit.

But in the last two weeks, Call4 Action has heard from many people who said the money never showed up in their bank accounts.

Many people who filed taxes online this year chose to receive the refund through direct deposit. That means they would get their rebate the same way.

The IRS began making those deposits in late April, but for thousands of taxpayers like Christine Feltes of Brownsville, the money never arrived.

"My car is broke down," said Feltes. "That money was going to go somewhat towards that."

Like many, Feltes used a major tax preparer like H and R Block or Turbo Tax.

What many of their customers never realized is that if they chose to have their fee for preparing taxes automatically deducted from their refund, they'll have to wait like everyone else for their rebate check to be sent through the mail.

When some of the refund money goes to the company preparing taxes , the IRS actually sends the check to the company or a third-party, which then deposits the rest of the money into taxpayers' bank accounts .

So technically, you did not get your direct deposit refund from the IRS, and you won't get your rebate that way either.

Both Turbo Tax and H and R Block told Call 4 Action the problem affects several other companies as well.

The IRS acknowledges it's confusing lots of customers. That's why they posted information on it on their Web sites.

Feltes found out her check won't be coming until late June.

The IRS will make the last of the direct deposit payments on Friday, before sending out the first batch of paper checks.

For more information, visit www.IRS.gov.



Statement from Turbo Tax:

The IRS has determined that some taxpayers can only receive their tax rebates by mail, even if they received their tax refunds by direct deposit. Taxpayers in this exception group include those who opted to have their tax preparation fees deducted from their federal tax refund or those who selected to have their refund deposited into more than one account. These taxpayers will get their Economic Stimulus Payment by mail -- not by direct deposit.

We realize that this situation, while not unique to TurboTax, is causing some concern and confusion for our customers. We have provided additional information about the rebates and the IRS distribution schedule prominently on our Web site at www.turbotax.com.

Additionally, customers can also contact TurboTax directly (888-777-4160). We continue to honor the TurboTax money-back, satisfaction guarantee. Additionally, we have an escalation process for any customer who may be facing financial hardship due to a delayed rebate.

Statement from H and R Block:

The IRS determines the distribution method for the 2008 tax rebates. This is the first time the IRS is distributing some tax rebate payments as Direct Deposit; prior rebates -- in 1975, 2001 and 2003 were all distributed as mailed checks only.

According to the IRS, only those taxpayers who chose Direct Deposit of their 2007 tax refunds on their federal returns would receive Direct Deposit of the tax rebates.

When a taxpayer chose to have tax prep fees withheld from the 2007 tax refund, a temporary bank account was involved with a third-party bank. The third-party bank received the tax refunds as a Direct Deposit from the IRS, not the taxpayer, and then deducted the tax prep fees from the refund and transferred these funds to the taxpayers' bank accounts. Because a third-party bank was involved, the IRS has said these taxpayers will receive mailed tax rebate checks.

The decision applies to all tax preparation service companies, as well as all tax software and online programs that offer an option for payment of fees deducted from refunds.


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