Upscale Tax Pros used a third party banking for 2019 Tax Season. The second round of economic impact payments (EIP-2), we would like to confirm that as of December 30th all payments routed to closed 2019 tax refund accounts were successfully returned to the IRS by Republic Bank.
IRS Information About EIP-2 and Returned Payments
As you are likely aware, the IRS website’s Get My Payment tool available at www.irs.gov/eip is now back up and running. The website is showing taxpayers with a returned payment a status of “Payment Status #2 – Not Available.”
The IRS has also published an updated statement on EIP-2 and these returned payments which explains, ““Because of the speed at which the law required the IRS to issue the second round of Economic Impact Payments, some payments may have been sent to an account that may be closed, or is no longer active, or unfamiliar. By law, the financial institution must return the payment to the IRS; they cannot hold and issue the payment to an individual when the account is no longer active.”
All temporary 2019 tax refund accounts at Republic Bank used for the processing of tax refunds in 2020 were closed prior to the distribution of any EIP-2 stimulus payments. This is a standard process that occurs to prepare our systems for the 2021 tax season. In the circumstance that the IRS attempted to deposit an EIP-2 stimulus payment to a closed Republic Bank account in error, the payment was automatically returned to the IRS as required by law. Republic Bank is not holding any of these funds and all EIP-2 stimulus payments sent in error have been returned to the IRS as soon as they were received.
Rebate Recovery Credit
For the most current information and to check the status of their payment, taxpayers should go to IRS.gov/eip. The IRS is instructing taxpayers to claim the Recovery Rebate Credit on their 2020 Tax Return if they see a payment status of “Payment Status #2 – Not Available” or if they you have not received their payment by the time they file their taxes in 2021.
We expect that due to this new guidance, many taxpayers will be in a rush to file their taxes in 2021 as quickly as possible. Please keep in mind and relay to your customers that it is critical for them to have all of their 2020 tax documents including W-2s and 1099s for unemployment or other compensation, before they file. If any of this information is left out of the tax return, it would likely create additional delays for them to receive their funds.