@Jsp2 Just to set the record straight, there is indeed a problem. Let me try to explain it.
Tax services like TurboTax, and most other major do-it-yourself tax services have offered "tax refund loans", "refund advance loans" or other loans based on the estimated refund. They also offer "pay your tax preparation fees to be taken from their refund. To do either they (the customer) must agree to a contract by clicking a "I agree" button (that most never actually read what they are agreeing to) so that the taxpayers direct deposit account number does NOT get sent to the IRS but to a 3rd party bank instead. That bank (Santa Barbara Tax Group) that most tax companies use, sets up a temporary account for the taxpayer and sends that account number to the IRS.
When the refund is issued, then the IRS send the refund to the temporary account and the bank then either keeps the refund to repay the advance loan, or take out the preparation fees and sends the remainder to the taxpayer.
This has worked well for years and never been a problem.
Now comes the stimulus payment, so instead of testing the feasibility of using the taxpayers direct deposit information that the IRS has on file, they blindly just start issuing payments to the accounts that the IRS has on file for those taxpayers, only to find that they only have temporary account numbers that no longer exist for millions of tax payers.
Who is to blame? Nobody could predict the stimulus payments, but the IRS should have understood how their own refund system worked before they dived into an empty swimming pool.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
