MOBILE, Ala. (WALA) – The stimulus money is flowing, but some Gulf Coast residents are getting disappointing surprises – the money is bouncing back.

For many, the reason for the rejected direct deposits has to do with the way they filed their tax returns. When people pay tax preparation services, they sometimes defer payment until their refunds arrive. When that happens, the tax preparers generally use banks to set up temporary accounts to handle the transactions.

In a typical case, when the Internal Revenue Service sends the refund, it gets deposited into one of those temporary account. Money for preparer’s fees to prepare the tax return – plus the fee for any advance the taxpayer took on a portion of the funds – get deducted. The balance of the refund then either goes to the client’s bank account or to the client in the form of a physical check.

The system generally works well for tax refunds. But it has caused agita when it comes to the economy stimulus payments authorized by Congress last month. The IRS has been using the bank account and routing number included on those tax forms to determine where to send the stimulus money.

“That is the bank account that the IRS is showing,” said Callie Duffie, who owns Whiddens Tax Service in Grove Hill.

But banks have closed those temporary accounts. Some banks have been forwarding the money to the taxpayers. Others have been sending them back to the IRS. The result is that rather than receiving direct deposits in days, some taxpayers will have to wait for weeks to get paper checks in the mail.

“That will be a bad situation because it will put me off five, eight weeks, It’s very frustrating.”

Mobile resident Alexis Murphy said she got an advance on her refund and learned this week that her stimulus payment bounced back. The extra wait for the stimulus will be a burden, she said.

“It’s gonna be quite a big one,” she said. “I’ve got three kids … It’s tough.”

Murphy said she knows other who are in the same position.

“It seemed like it’s happening to a lot of people,” she said.

It is unclear how many Gulf Coast residents and taxpayers across the country are facing a similar predicament. But some of the financial institutions that work with tax preparation companies are defending their conduct. MetaBank, whose EPS Financial division provides the service, put a message on its website Thursday explaining that neither the bank nor the tax prepares have access to the stimulus money.

The bank pronounced itself “deeply concerned” that the error will impact customers.

 “MetaBank is working closely with our tax refund partners to ensure that they redirect customers to the IRS,” the bank said in the statement. “As we are expeditiously sending EIP payments back to the IRS, we encourage impacted consumers to contact the IRS directly with questions or for further details.”

But the IRS has shuttered its call center because of the novel coronavirus outbreak.

“It’s just a lot of confusion,” said a Thomasville woman, who asked not to be identified. “If you had somebody you could talk to at the IRS, it wouldn’t be a problem.”

The agency has set up a “Get My Payment” website so people can check on the status of their stimulus payments and provide banking information. But the IRS has said people cannot update the information after the money has been sent.

That means people who have had money sent to closed bank accounts likely will have to wait for checks in the mail

“We’ve had a number of clients who have been upset about that,” said Duffie, the Grove Hill tax preparer.  

Duffie added that she sympathizes.

“We have been super frustrated about that. … It’s been a very big mess,” she said. “We’ve been trying to keep our clients informed.”

Some people have had misdirected stimulus payments for other reasons. Semmes resident Terica Henry told FOX10 News that she discovered when reviewing her tax forms that she mistakenly added an extra number when she wrote down her bank account number.

Henry said she did not know a way to correct the error.

“That will be a bad situation because it will put me off five, eight weeks,” she said. “It’s very frustrating.”

Mindy Lee, a Connecticut resident who contacted FOX10 News after seeing a report on the “Get My Payment” portal, said she was concerned because she switched banks after filing her last tax return.

“I’ve been trying to reach someone at the IRS and the Treasury Department for weeks to change my bank information,” she said.

About the prospect of having wait weeks or longer for the stimulus money, Lee said: “It’ll be a burden.”

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