IRS and major software companies warn that stimulus check payments could be delayed. The second stimulus check could be delayed for some taxpayers according to a warning by the Internal Revenue Service (IRS) and major tax preparation software companies.
The problem is that directly deposited payments ended up in temporary or alternative bank accounts used to receive the first round of stimulus payments that businesses had closed. These include refund transfer services used with tax preparation software and prepaid debit cards.
The delay in depositing the second stimulus check could affect up to 14 million people who may have lower incomes and be among those who may need the stimulus money the most.
After the new legislation passed, the second round of stimulus check payments began distributing $600 from the night of Dec. 29 through direct deposit by the IRS.
When some of the recipients began tracking their stimulus check through the Get My Payment tool they were surprised to see a different bank account number listed as theirs, however, no money from the deposit was in their bank account.
A similar problem arose during the delivery of the first stimulus check in April. Some of the taxpayers used Refund Transfer services that allow them to pay their tax preparer with their own refund, an option that is attractive to some filers who also experienced late payments due to a clerical error.
For the refund transfer to work, the tax preparer creates a temporary bank account to receive the refund, then takes his or her share and then passes the rest of the money to the filer and closes the account. But the IRS used the closed bank account on file, leaving some of the funds in limbo.
Depending on the situation, some of these contributors will continue to receive their funds directly deposited into their bank account or on a reloadable prepaid debit card. However, others may face further delays in receiving a paper check or getting their credit at the time of their 2020 tax return.
In some cases, the money was sent to a different account than the first stimulus payment, according to tax preparation company H&R Block.
The IRS reported that in case the tracking site reflects a direct deposit date or partial account information “then your payment will be deposited there. The site indicates that the payment date may take up to four weeks. In the event that the tracking tool displays the message “Payment Status #2 – Not Available,” then the only option to claim your payment will be through a claim for a tax credit by completing line 30 of the 2020 Form 1040 0 1040-SR.
The Get My Payment site may display a hard-to-recognize account number. This deposit will be transferred in the form of a direct deposit, paper check, or debit card.