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#1658510 - 01/31/12 06:52 PM Tax Refunds
CrashDavis Offline
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Our bank is having customers having their friends tax refunds being deposited into their checking account and the bank customer come in and withdraw the money. The tax refunds are for people who are not customers of our bank (obviously). We are requiring both parties come to the bank to withdraw the money. My question, can we charge a fee for withdrawing this money for the non-customer?.

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#1658528 - 01/31/12 07:13 PM Re: Tax Refunds CrashDavis
Princess Romeo Offline

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You may get a better response by posting in the Operations Thread. This is not a BSA question unless you are concerned about laundering tax refunds. The only other concern would be the fraudulent deposits of tax refunds, which is not an unheard of scam in minority communities.
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#1658536 - 01/31/12 07:03 PM Re: Tax Refunds CrashDavis
CrashDavis Offline
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Thanks. I am concerned about that also but right now just wondered if we can charge a fee.

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#1658555 - 01/31/12 07:26 PM Re: Tax Refunds CrashDavis
rlcarey Online
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Galveston, TX
If these are coming in via ACH, I would be using my option to return these transactions. As PR indicated, this is a sign of tax fraud/scams and the IRS instructions also indicate that a direct refund may be rejected if you request a refund into an account not held in your name. The instructions also indicate "The taxpayer may designate refunds for Direct Deposit to qualified accounts in the taxpayer’s name."
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#1658622 - 01/31/12 08:14 PM Re: Tax Refunds CrashDavis
John Burnett Offline
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If Randy Carey is foolish enough to have the IRS send his tax refund to my account at my bank, my bank has no business dealing with him in any way. Once the money is in my account, it's mine and the fact that Randy may have a claim on it is not my bank's legitimate concern. Randy will have to take it up with me.

Seriously, Randy is correct. Banks should not be knowingly allowing this to go on.
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#1658646 - 01/31/12 08:37 PM Re: Tax Refunds CrashDavis
HappyGilmore Offline
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Pulling people out of the ditc...
My first question is how would yo konw if the customer was withdrawing his funds or that of the tax refund recipient? It isn't like the funds are segregated in the account.

as far as charging, I think you need to look at your deposit contract and what it states, as well as look at the Green Book concerning disbursements.

But, i'm also with Randy and John on this, it has way to many opportunities to creat problems that you don't want to be in the middle of.
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#1658874 - 02/01/12 01:41 PM Re: Tax Refunds CrashDavis
CrashDavis Offline
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I agree that this will cause a lot of problems. These come in by ACH and we are going to look daily at these to determine if they are legit. I want the bank to return the tax refund back to the IRS if the tax refund is for somebody that is not on the account. Of course this will be for personal accounts. Not tax service accounts.

John I agree with you. I can not believe that people would do this. The people who do this do not have a checking account anywhere(they cannot have one due to financial problems) and this way they think they can get their money faster. They do not want the refund anticipation loan because they do not want to pay that high fee so they are getting their "friends" to help them.
Last edited by CrashDavis; 02/01/12 01:44 PM.
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#1658885 - 02/01/12 01:52 PM Re: Tax Refunds CrashDavis
edAudit Offline
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You are here
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#1659032 - 02/01/12 03:49 PM Re: Tax Refunds CrashDavis
Retread Offline
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This should be an eye-opener on tax fraud and ID theft. Are any of these your customers?

http://www.irs.gov/compliance/enforcement/article/0,,id=252707,00.html
Last edited by John Burnett; 02/02/12 05:49 PM. Reason: made url a link
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#1659991 - 02/02/12 07:38 PM Re: Tax Refunds CrashDavis
Doug Hendrickson Offline
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We are also getting folks deposit tax refund checks into their checking account after the payee has endorsed it. Effectively, the customer is cashing the payee's check for them. In one case a customer tried to do this when not having enough money in their account to cover the check.

I had to remind branch staff that we are under no obligation to cash or take that check for deposit, even if it does say "Official Check" on the top. In this case I had them decline the deposit.
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#1666416 - 02/16/12 07:12 PM Re: Tax Refunds CrashDavis
Doug Hendrickson Offline
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An alert teller noticed that a person was cashing a large check drawn on one of our accounts. It was a personal account into which the owners were having other people's tax refunds deposited by the IRS (ACH). Once I was advised I prevented the cashing of the check and had the ACH returned to the IRS.

However, had this been a business account, and due diligence revealed it to be a tax preparation business (e.b., John Doe DBA John Doe Tax Service), would you allow the deposits or what sort of enhanced due diligence might you perform?
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#1666607 - 02/16/12 09:57 PM Re: Tax Refunds CrashDavis
edAudit Offline
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You are here
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#1704533 - 05/30/12 05:36 PM Re: Tax Refunds CrashDavis
leo_bsayer Offline
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If you were searching ACH files for this type of activity, what exactly would you search? I thought initially that you could look for the company ID, but it appears that the Treasury Department uses multiple company ID's, depending on the type of payment it is. Also, this doesn't apply simply to tax refunds, correct? Any payment going into an account that is not owned by the recipient is subject to being returned. Is there a way to create a report, (I currently use PCS but am converting to Jack Henry), to monitor this type of activity?

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