The IRS informed us that our stimulus check is being delayed because we used Turbo Tax to file our taxes. Is this issue being addressed? We won't use Turbo Tax again.

[Carl]

I'm not a Turbotax employee. But I find your statement hard to accept. So exactly "how" did the IRS inform you of this?

[Jsp2]

That's totally BS!  We used Turbo Tax for our taxes too and our check was deposited last Tuesday!  So sorry for that confusion --- but what you were told is totally wrong.

[macuser_22]

Then don't use any other online tax service either because they all have the same issue with temporary direct deposit accounts for refund advances and fee payment from refunds - it is not just  filed with TurboTax.

[macuser_22 · Accepted solution]

@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.

[Jsp2]

Wow - OK,  I totally stand corrected.  Have been a fan of Turbo Tax for many years now, but have never used any of those options - and guess that's why we were surprised with that deposit on Tuesday.  Thank you for sharing what the question was all about - I get it now.  Totally agree it's something that needs help, clearly.  All best wishes to you and all!

[NCperson]

I would "love" to read the terms and conditions of these TT products to understand what could and could not be shared.  For all we know, those T&C's did not permit TT or Greendot to share the permanent account numbers with the IRS

 Greendot and SBTPG are affiliated companies / sister companies.  For SBTPG to share information, such as that temporary account number may have required an affiliate agreement that the customer would have to sign off on in this unexpected situation.  There are severe banking requirements about sharing information between bank and non-bank affiliates without additional customer consent.  

I simply do not believe it is as simple as the IRS jumping into the deep end of an empty pool.  It may have been SBTPG, Greendot and TT had already jumped into that deep end of an empty pool and the IRS had no choice but to follow. 

[macuser_22]

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@NCperson wrote:

I would "love" to read the terms and conditions of these TT products to understand what could and could not be shared.  For all we know, those T&C's did not permit TT or Greendot to share the permanent account numbers with the IRS

 Greendot and SBTPG are affiliated companies / sister companies.  For SBTPG to share information, such as that temporary account number may have required an affiliate agreement that the customer would have to sign off on in this unexpected situation.  There are severe banking requirements about sharing information between bank and non-bank affiliates without additional customer consent.  

I simply do not believe it is as simple as the IRS jumping into the deep end of an empty pool.  It may have been SBTPG, Greendot and TT had already jumped into that deep end of an empty pool and the IRS had no choice but to follow. 

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SBTPG is owned by Greendot.   In my (humble) opinion, the IRS should never have leaped into something as major, and unpredicted as using their database to issue these payments with out some simple testing first to find any unintended consequences and have a plan to deal with it.   Tax companies should not be blamed for services that customers have demanded and they have provided for years, just because of an unpredictable event.

[NCperson]

I guess i'll take the opposite side of the argument.  Since this same thing occured in 2009,  TT, H&R Block, etc.  had plenty of time to figure something out with their providers as recessions do occur from time to time and the Government likes to do stimulus payments! 

p.s. technically, Greendot Corporation owns Greendot Bank and SBTPG as affiliate companies.   A bank (Greendot Bank) can't directly own a non-bank (SBTPG) as the Bank is FDIC insured and the non-bank is not.  That is where all these data sharing questions come into play.....

[macuser_22]

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@NCperson wrote:

I guess i'll take the opposite side of the argument.  Since this same thing occured in 2009,  TT, H&R Block, etc.  had plenty of time to figure something out with their providers as recessions do occur from time to time and the Government likes to do stimulus payments! 

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There is no argument.  I am just saying what happened.   This outcome should have been known in advance and avoided.  I will say that after 50 years experience in implementing new programs one always does feasibility testing first to find the bugs.

I fail to understand why you would think that private companies should need to change the way they do business because of what the Government "might" do in the future and what happened 11 years ago is immaterial and from my understanding that payment was by checks, not direct deposit. (I might be wrong but if by direct deposit in 2009, then I do  not recall any problem like this in 2009 and if there was then  the IRS should have known about it.)

[NCperson]

<<fail to understand why you would think that private companies should need to change the way they do business because of what the Government "might" do >>

because it did happen previously and private companies have customers to serve who paid for a service.  How can these private companies say to these paying customers, "hey not our fault' ?  -  read a number of the comments on this board.  TT etc.  Customers will say, "well, we are going elsewhere or not paying for these additional services going forward". 

[merrilec]

Thank you for your reply.

Two points to clarify:

1. We don't have direct deposit setup, because in 20+ years we've never received a refund...so no need.

2. Because of #1 'refund loan' doesn't apply

The snail mail checks are being delayed for precisely what you said.

We are not alone, as millions of others are in the same boat.

Thanks again.

[merrilec]

Carl,

I imagine you truly believe you are being helpful,  or you wouldn't have posted a response, but you know very little of which you speak.

[Phinsup]

Why didn't Turbo Tax notify me of this issue sooner?   I should have been notified day 1.

I was sitting here assuming the IRS had my direct deposit info for several weeks and only learned of this issue through a newspaper article.    What???   Then I went to the IRS website and entered my info that I had assumed they already had from when i filed my taxes.   Now I am sitting here still waiting for my stimulus check.  Very poor customer service.