The IRS is reminding tax professionals and taxpayers that procedures kick in this January to limit to three the number of refunds electronically deposited into a single financial account or onto a pre-paid debit card. The fourth and subsequent refunds automatically will convert to a paper refund check and be mailed to the taxpayer.
The tactic, which applies to financial accounts such as bank savings or checking accounts and to prepaid, reloadable cards or debit cards, is part of an IRS effort to combat fraud and ID theft.
The new limitation also is also designed to protect taxpayers from preparers who obtain payment for their tax prep services by depositing part or all of their clients’ refunds into the preparers’ own bank accounts.
Taxpayers will receive a notice informing them that the account exceeds the direct deposit limits, and that they will receive a paper refund check in approximately four weeks, barring any other issues with the return.
Direct deposit must only be made to accounts bearing the taxpayer’s name.
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