When you request that your fees be taken out of your refund then the IRS cannot do that, it it is done by a 3rd party bank (SBTG) Santa Barbara Tax Group that sets us a temporary account for you and gives the routing and account number to the IRS so the refund will be sent to that temporary account and not directly to you. That is the only that SBTG can then remove the money that you owe and then deposit the rest in to your bank account. The IRS does not have your actual account number so the IRS cannot make a direct deposit to your account.
That is the way that it works and has always worked for ALL tax services that offer pay from refund or refund advance service - not just TurboTax. It has been done this way for years, however it appears that the IRS did not think about this when they devised the direct deposit of stimulus method. This has never been done before (unintended consequences).
(TurboTax (and other tax software companies) are not a bank and can never (by law) handle any refunds or money, that can only be done by a registered bank which is why the SBTG exists.)
Here is a statement from SBTG about this issue
https://www.sbtpg.com/coronavirus-stimulus-payment-info/
**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.**
