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Im a licensed tax preparer in California, just recently I…

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Im a licensed tax preparer...
Im a licensed tax preparer in California, just recently I inputed a tax clients checking account incorrectly and filed it with the IRS, this resulted in that clients income tax refund for the year 2016 ending in somebody's else account at the same bank where the IRS sent the refund. Now the client is suing me for the refund amount, not sure if I can be sued but she is. If I lose can I go after the bank, who is stating that its not their fault, or is there a way I can go after the person who received the refund and then took off with the money and closed that account at Chase bank? Please advice, as this is new to me after so many years of preparing taxes. Thank you; Luis V Olivares
Submitted: 5 months ago.Category: Tax
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Answered in 12 minutes by:
11/22/2017
Tax Professional: Lev, Tax Advisor replied 5 months ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,692
Experience: Taxes, Immigration, Labor Relations
Verified

Several issues...

The bank is identified as a Receiving Depository Financial Institution (RDFI)

According to the Department of the Treasury’s Bureau of the Fiscal Service...

Is an RDFI liable for an IRS tax refund sent to an account that does not belong to the named or intended recipient?

No. An RDFI is not liable for an IRS tax refund sent through the ACH network to an erroneous or fraudulent account since the IRS provided incorrect account information.

Can an RDFI rely strictly on the account number in the ACH Entry Detail Record when posting a tax refund payment to a customer’s account?
Yes, an RDFI may post IRS tax refunds received via the Automated Clearing House (ACH) network using the account number only. Title 31 of the Code of Federal Regulations, Part 210 (31 CFR Part 210) requires Federal payments be sent to a deposit account at a financial institution in the name of the recipient. However, the RDFI is not obligated to ensure that IRS originates refunds in compliance with this requirement. Some smaller RDFIs may perform a match between the name on the payment and the name on the account; however 31 CFR 210 makes it clear that an RDFI is not required to perform a match.

.

So - in this situation - we may NOT held bank responsible.

Sorry if you are expected differently.

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Tax Professional: Lev, Tax Advisor replied 5 months ago
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