If you used the services of an online tax preparer to file your taxes, your coronavirus stimulus check may be delayed.
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This story originally appeared on ValueWalk
The IRS has already started sending the stimulus checks to eligible people. The process of sending checks is expected to be smoother this time, but is unlikely to be without issues. One such issue that may delay your coronavirus stimulus check is if you used the services of an online tax preparer to file your taxes.
This may delay your coronavirus stimulus check
The IRS started sending out stimulus checks last week, and many have already received the payment in their bank account. However, the IRS and major tax prep software companies admit that stimulus checks may be delayed for some people.
Many people for whom the IRS had direct deposit information started getting their stimulus checks from last week. On the other hand, many who were waiting for their payment and checked their payment status on the IRS “Get My Payment” tracker, were surprised to see a different bank account listed under their name.
Such an issue primarily arises for those who use tax preparer services for filing their taxes. Many taxpayers use “Refund Transfer” services, which enables them to make the payment for the tax preparer from the tax refund itself. This is a good option for those running short of money and time.
For this process to work, the tax preparer creates a new temporary bank account to receive the refund. Once the IRS sends the refund in this account, the preparer takes their cut and transfers the balance (if any) to the filer. The bank account is then closed. However, the IRS has this closed bank account on file, and this leaves some taxpayers in limbo.
What does the IRS say about it?
Such taxpayers will still get their payment, but it may be delayed. They may either get the payment via paper check, or in the form of a credit on their 2020 taxes next year. In case the IRS mails you a paper check, it could take up to four weeks to arrive. In its updated guidance, the IRS has asked people to “watch your mail carefully for a check or debit card.”
The IRS has also acknowledged this issue in an online FAQ page. “Because of the speed at which IRS issued this second round of payments, some payments may have been sent to an account that may be closed or no longer active,” the agency says.
Further, the agency also notes that such payments would “bounce” back to the agency as the financial institutions “cannot hold and issue the payment to an individual when the account is no longer active.”
NBC News, citing a banking industry source, claims that this issue could impact as many as 14 million people. A point to note is that it is not a new issue, and many people experienced it at the time of the first stimulus checks as well.