Tax Refunds

I just found that we have an account, held by an elderly lady, that has multiple tax refund checks being direct deposited. The checks are for her daughters, their boyfriends, etc... The lady is then giving these individuals checks to bring to the bank to cash, so they can get their money. The other individuals are NOT on the DDA accout. They do not have an account here at all.

Is there any way we can stop the checks being direct depoisted into this account? Is there any way we can refuse to give them the cash?

Are we responsible for reporting this? SAR???

We had something similar in the past. We now require that a direct deposit name match the name on the account. We will not accept the deposit with another's name on it. I would inform the customer and begin returning the deposits.

When you say that you now require the name on the refund to match that of the account, do you have that in policy?

You are not required to let the entire Yokum family run all of their income tax refunds through Mammy's account. Repeating what others who know more about ACH than I do have said here, the return code is R03 and is used when the account number is valid, but does not correspond to the individual identified in the entry. I suggest you let them know your plans in advance.

Simply indicate you do not allow ACH credits in the name of anyone but an account owner. If you say it, it's your policy. It does not have to be in writing.

Whether this is tax return fraud and you owe FinCEN a SAR is a completely separate issue. FIN 2012-A005 So far, it does not sound like it.

Mammy Yokum! I'm ROTFLMAO just thinking about the cartoon and applying it to a customer!!!

Also, if you read the IRS site regarding direct deposits, it consistently indicates:

Your refund should only be deposited directly into accounts that are in your own name; your spouse’s name or both if it’s a joint account.

I do not recall if we added it to the written policy per say. But it is our practice at this point.