No, only some people who used refund transfer to pay their tax preparation fees out of their refunds.
Turbotax NEVER receives a stimulus payment. The bank that Turbotax and most other tax preparers use might have received your deposit if the IRS screwed up.
If you used refund transfer to have your fees deducted from your refund, that means your refund was sent to Turbotax's bank SBTPG, to open a temporary account in your name, receive the refund, subtract the fees, forward the rest of the money to your regular account, and close the temporary account.
That means that the IRS never had your real banking info, just the temporary closed account. The IRS had a web site open through October where you could have updated your banking information.
The IRS should not have tried to make deposits into these closed accounts, because they know which banks provide this service. During round 1, when the IRS mistakenly sent stimulus payments to SBTPG, SPTBG tried to match them to their customers and forward the money. However for round 2, SBTPG has decided to bounce all payments back to the IRS.
So if you used refund transfer to pay your fees, and if you never updated the IRS with your banking information, the IRS should recognize this fact and mail you a check or debit card. If the IRS makes a mistake and tries to do a direct deposit, it will bounce, and the IRS would normally mail a check or debit card later, but it takes longer.
The new law says the IRS can only make payments until January 15. After that, if you don't receive a deposit, check or debit card, you can claim the rebate as a credit on your tax return and it will be added to your refund.
Refund transfer is a terrible product -- not only is it overpriced, but putting a bank you don't know in between you and the IRS is always a bad idea. In 2020, it turns out to be galactically bad.
When you say have have your fees deducted- is this the case when using TT and select
the option to pay TT fees out of the refund?
Meaning if this was done TT’s bank actually received the funds and passed along to my bank?
Why was this not an issue with the first stimulus check?
Correct, if you have your TurboTax fees deducted from your refund, the only way to process that is to send your refund to a TurboTax banking partner. That is because the IRS will not split your refund with TurboTax or anyone else. Nearly all the consumer tax preparation companies use the same bank, in fact. That bank opens a temporary account in your name, subtracts the TurboTax fees and their service charge, forwards the rest of the money to your regular account, and closes the temporary account.
During the first round of the stimulus, that bank agreed to work with the IRS to re-open the temporary accounts, and forward the payments to the original customers, even though that was a violation of banking security laws. For the second round of the stimulus, the bank is refusing to process any stimulus payments and is bouncing them all back to the IRS. I don’t blame them, for various reasons, and in fact since the IRS knows exactly which customers used this process, the IRS never should have attempted to make the deposit in the first place and it is the IRS’s mistake that is ultimately responsible for this problem.
If the IRS had directly mailed checks or debit cards to affected customers as they were supposed to, the customers would probably have the checks in the mail before January 15. Customers for whom the IRS tried to make improper deposits, will probably not get their checks before the 15th and can claim the credit on their tax return.
I don’t see how this is the IRS problem, the banking information they have is what Turbo Tax provided via filing our taxes and the banking info (accct routing) I gave Turbo Tax was mine, which shows on the first stimulus status.
Turbo Tax should have anticipated this and worked to have the temporary accounts reopened like they did prior or the bank should have rerouted which I’m positive this is possible.
So I’m unsure how the IRS is at fault when again they’ve got the banking information provided when taxes are filed by Turbo Tax - you can’t expect them to know that information isn’t valid anymore or expect Turbo Tax customers to know they’re providing their banking information for another bank to pass through the funds.
It is the IRS’s fault because they know which banks provide the refund transfer service and they can recognize from your bank account information that you used the service, and they are not supposed to send payments to those temporary closed accounts.
I don’t think TurboTax has made an official statement yet. Here is an interesting statement from meta-bank, one of the banks involved. although it relates to round one of the payments, the same situation has occurred in round two.
Here is the update from SBTPG bank.
There is no way TurboTax can “work with” the banks involved to “fix” this problem. The IRS literally has a list of taxpayers who should not have been sent direct deposits, and they sent direct deposits anyway. This is your government at work.
But how are they expected to have anything more than the routing and account info that was provided when they received the filed tax returns?
It seems like this was something that SBTPG was able to address for the first stimulus (if I understand they temporarily opened the accounts to facilitate it).
Their statement confuses me in that if I attempt to send a wire or via ACH and the information isn’t correct (which I’ve done sending and receiving) the receiving side just rejects it. They seem to indicate it’s being sent back which if it’s via wire should be almost instantly.
I get the view the IRS may have known or should have done something but I go back to what could it have been? Their trying to send everyone in the country funds most electronically and the burden should be on information provided on the tax return filed, in this case Turbo Tax, and the information provided to Turbo Tax isn’t a pass through bank and the overwhelming number of people who use TT never realized this.
Turbo Tax is responsible for providing the correct information to the IRS for those who they file for. This should have been done at the highest level (CEO / CFO) from both TT and the pass through bank.
The IRS stated if you received your refund from filing season the stimulus would be deposited the same way and their was nothing needed to be done - those of us who elected to have the fee deducted from the refund still had the refund deposited and I looked back and there isn’t any indication it’s from SBTPG.
Also, I understand this is also an issue for HR Block clients who elected to pay the fee from their refund but from what I’m seeing they’re providing a lot more information and making certain their clients are getting their stimulus funds in the very near future (days) - I’m wondering what’s the reason or mechanism that’s not permitting Turbo Tax in doing the same?
Lastly it’s not like the second stimulus funds was just decided a week or two ago after someone put it up for our congress - this has been dragging on and Turbo Tax should have anticipated being in a hurry up and wait then the chaos of the logistics. This should have been table topped and I can’t excuse their lack of preparation or being engaging - all their social media and statements just blame the IRS as the only ones who issue funds transferred- true but cmon there’s some assumptions made when people use Turbo Tax and one of them is they will file electronically and on time and their filing will include any refund being deposited electronically if that’s the preferred method. There’s no assumption the use of a pass through bank that wasn’t visible nor did they need to be that were able to get refunds deposited, the stimulus that was issued this year but unable this time.
When TurboTax discovered the bank wasn’t going to temporarily open the accounts or whatever was done the last stimulus they should have immediately worked with another bank and the IRS, which they happen to have a good relationship with I happen to know (specifically the electronic filing operations e-file which TT / HRBlock are major players).
Bottom line is those who used TurboTax are without their stimulus. The millions of others who did not use TT received theirs. Hard to blame the IRS for their being able to deposit to millions of bank accounts in almost no time and TT clients are made to wait to file taxes before claiming it - only after the W2 has been received and then after filing and the time to receive it.
TurboTax needs to explain why the bank temporarily opened accounts last time but couldn’t or wouldn’t this time. They need to stop blaming the IRS and explain what HR Block is able to do for their clients TurboTax isn’t and why. They also need to apologize and be upfront with what happened why and include the good and bad - people are mad and their copy paste statements about the IRS is irritating and sketchy.
When the stimulus was approved and the dates provided I was able to make arrangements based on receiving it, now my word isn’t being kept and my reason that it’s due to having my fee taken from my refund isn’t flying that well - or at least it feels like I’m being looked at as making it up.