A change of address, a new bank account number, or just a check that gets lost in the mail. There are a number of reasons why you may not receive your refund, but the IRS does not take responsibility in certain cases, especially when the taxpayer or tax preparer makes mistakes.
While the IRS can track a payment and return the funds in certain cases, the IRS is not responsible for lost refunds if the taxpayer or tax preparer enters the wrong account information for a direct deposit.
THE FOLLOWING ARE SOME COMMON ERRORS WITH DIRECT DEPOSITS AND HOW THE IRS RESPONDS:
A digit in the bank account is missing or the bank's routing number is incorrect, so the tax agency's software cannot issue a refund. In this case, the IRS will send you a paper check to your mailing address instead of direct deposit.
The taxpayer or their tax preparer incorrectly enters an account or routing number and the number passes IRS verification, but the designated financial institution rejects the funds and returns the deposit. The tax agency will issue a paper check for the amount of the deposit once it is received.
The taxpayer applied for a Refund Anticipation Loan (RAL) or Refund Anticipation Check (RAC) through their tax preparer or preparation software. This usually occurs when the taxpayer authorizes the preparation fee to be deducted from the refund. Even if you didn't request direct deposit, these types of refunds are deposited directly into the preparer's financial institution, so you should contact the preparer for a resolution.
If the funds are not available or the bank declines to return the funds, the IRS cannot force the bank to pay the money back. The case may then become a civil matter between the taxpayer and the financial institution and/or the owner of the account in which the funds were deposited.
In general, if you have a problem with your direct deposit, such as closing your bank account after you've submitted your return and requested direct deposit, the financial institution will return the funds to the IRS. The tax agency will then issue a paper check to the address indicated on the return.
WHAT DO I DO IF I DO NOT RECEIVE MY DIRECT DEPOSIT REFUND?
First, double check your tax return to make sure you entered your bank account number and routing number correctly.
If the information is correct and the status of your refund says that the payment has already been sent, contact the IRS, as you may need to request a refund tracking.
If you or your tax preparer made a mistake and the IRS still hasn't sent the payment, call the IRS at 1-800-829-1040 to request a stop payment or correct the information.
If the IRS has already sent your refund payment to the wrong bank account, you may not be able to get it back.
However, start by contacting the bank or credit union that received your refund to notify them of the error. If the money is returned, the IRS will usually mail you a paper check.
But if you don't get the funds within two weeks of contacting the bank, you'll need to complete Form 3911, which will give the IRS the authority to track the money and contact the institution on your behalf.
The bank will have 90 days to respond to the IRS, but will not be required to return the refund. At this point, the only option is a civil lawsuit against the financial institution or account holder where the money was deposited.