IRS REVERSES COURSE AND NOW WILL BE REDIRECTING PAYMENTS TO PROPER ACCOUNTS
For those that have not yet received their EIP2 payment, there is a subset of payments that were directed to closed accounts – your customer’s payment may have been caught up in that group. The IRS will now be processing those payments so taxpayers will receive them by February 1st.
• Your customers’ EIP2 stimulus payments will be processed by IRS and sent via your customers’ bank accounts or by check by February 1st based on the information you provided with their 2019 tax return.
• Once payments are made by IRS, the Get My Payment tool on the IRS website will be updated to reflect the payment amount after February 1st.
• Banks or tax preparers DO NOT have the funds – the US Treasury has the money and will be delivering it to taxpayers through the IRS process as stated above.
The IRS, in their expedited effort to get these payments out, issued many of the payments in error to bank accounts that had been closed. If funds are attempted to be deposited into closed bank accounts, the financial institution is required, by law, to reject those funds back to the treasury.
Initially, the IRS communicated, given the volume of their error, that they would not be able to reissue these funds. They had asked consumers impacted by their error to claim the EIP Recovery Rebate Credit on their tax return. This would have delayed the delivery of EIP to many customers until the end of February, and we at MetaBank as well as others in the industry found this solution unacceptable.
MetaBank has been working tirelessly with the IRS to find another solution that will get funds to those that need it faster. As of yesterday afternoon the IRS has finally agreed to reprocess those payments that they deposited to closed bank accounts in error. The IRS has indicated that these payments would be reprocessed as soon as the IRS system goes officially live this tax season. We expect those payments to be processed by the end of January and begin to arrive in bank accounts or by check beginning February 1. This same group of taxpayers will therefore not need to file a credit on their tax return to get their EIP2 as was indicated earlier in the week. This decision to process these payments means that the IRS will take care of it for you and you do not need to do anything to get it.
The IRS FAQs are updated regularly as this continues to unfold.
We will continue to update you with any additional details as we learn them. We are working on additional tools to help you, our partners, help your customers. More details on that will be forthcoming this week.