Question: If I have screwed up my savings account number while furnishing that information to the IRS to facilitate direct deposit arrangement, what would my chance be in recovering the tax refund back? I have been calling the IRS and bank regularly since then but the prospect does not look promising.  Does that mean I lost my $4000 refund forever? The income tax help facilities on IRS website are absolutely no help at all!

It seems really ridiculous! I thought being able to provide them information such as the exact routing (orABA) number, account number (obviously not the intended account in this case) and date the refund got deposited. I have even turned on those traces with the IRS – BUT apparently that does not move them to help. The bank is not taking any action to remedy the situation even though I have made numerous trips to the branch, and raised all paper works discussions imaginable.

Isn’t there a legislative obligation on the bank’s part to do something rather than being lame duck banker? Whatever the unintended beneficiary of my tax refund? Is it criminally wrong for him or her to hold on to my money? Do I really need to approach a legal counsel to sort this out? I am so desperate and any input would be greatly appreciated.”

Answer: I do not want to sound too negative but you may not like what is about to appear next.

It is extremely important to double check the bank routing and account numbers as you fill out those direct deposit forms. I try to draw out the significance of this in comparison with the check option.

In the case of check, the IRS’s obligation is to send out a refund check, the rest is up to you and your bank. If you accidentally deposit that check into a wrong account, you can demand the bank to corrective action as it is compelled to do so under our legislation. However no such form of protection exists in the world of electronic transfer, or specifically direct deposit from the IRS.

The official stand of the IRS is that it has released the rebate on the taxpayer’s instruction and once the money deposited into the account as directed, the IRS is powerless to reverse this transmission. It now becomes a private matter between your bank and you. It all depends on you how you will be able to negotiate yourself out of this position.