IRS glitch with tax preparer companies may cause stimulus check delays for many Americans

Updated: Apr. 20, 2020 at 7:29 PM EDT
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COLUMBIA, S.C. (WIS) - The Internal Revenue Service began issuing the Economic Impact Payments authorized by the Coronavirus Aid, Relief and Economic Security, also known as the CARES Act, over five days ago.

The U.S. Department of Treasury officials said last week over 80 million will receive checks, but many people in the Midlands are saying they haven’t seen a dime.

There seems to be a number of glitches in the system, especially for the millions of Americans who use a tax preparer like H&R Block or Turbo Tax. For many residents in South Carolina, they said the most frustrating part is not getting an answer from the IRS on when the issue might be resolved and all they can do is patiently wait.

“It’s so frustrating that every single organization that we ask -- whether it’s the IRS, the taxpayer group, the world finance taxpayers, no matter who we talk to -- it’s ‘We don’t have any information for you. We know that your check got sent back, but we don’t have any information for you. That’s all we know,” Victoria Rabon, a Camden resident, said.

Rabon said, after getting laid off in March and her husband’s hours being cut back, they’ve been anxiously awaiting the stimulus check.

“We checked the portal and it had that our stimulus check was being deposited to an account ending in my husband’s social security number, but we’ve never had an account ending in my husband’s social security number,” Rabon said.

Rabon uses a tax preparer in Camden called World Finance.

Rick Reames, the former director of the S.C. Department of Revenue and a Nexsen Pruet tax attorney, said the checks may be getting put into temporary bank accounts made by the tax preparer.

“Companies like an H&R Block or companies that help taxpayers file returns will often direct refunds to a prepaid gift card or a temporary bank account to allow other things to occur with that money,” Reames said.

Reaves said the tax preparer usually takes out fees before issuing a refund to customers.

Rabon said that her preparer told her that they sent the check back to the IRS, but her check status on the IRS portal hasn’t been updated.

“So we are all just waiting with no information on how long we need to wait,” Rabon said.

It’s unclear how long it might take for those who use tax companies to see their checks. An IRS spokesperson said it could be anywhere from two to five weeks, if not longer due to the abnormal circumstances.

Reames said part of the problem is the IRS has had to rollout the stimulus program essentially overnight.

“They are dealing with 30- and 40-year-old systems that have not been updated in a long time so they are trying to squeeze a stimulus program into a system that wasn’t necessarily designed to do that,” Reames said.

The IRS launched the “Get My Payment” tool for people to track the status of their check, but many who use it are getting a “payment status not available” The IRS said that is coming up for a number of reasons including if the IRS hasn’t finished processing the individual’s 2019 tax return, if they don’t have the person’s data, or if the person isn’t eligible.

“It’s hard when you need the money now. Patience is not what people want to exercise, but unfortunately, given the large nature of this program and the aging technologies, people are going to have to exercise some patience,” Reames said.

The IRS said paper checks will go out to millions of Americans this summer who do not have direct deposit information on file with the IRS. A mock-up of the paper stimulus checks came out on Monday.

The checks will have “Economic Impact Payment” with the president’s name underneath. It will be the first time in history a president’s name appears on an IRS check.

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