Question

Jake is an IRS tax law-certified volunteer preparer at a VITA/TCE site. When preparing a return for Jill, Jake learns that Jill does not have a bank account to receive a direct deposit of her refund. Jill is distraught when Jake tells her the paper refund check will take three or four weeks longer than the refund being direct deposited. Jill asks Jake if he can deposit her refund in his bank account and then turn the money over to her when he gets it. What should Jake do?

1) Jake can offer to use his account to receive the direct deposit, and turn the money over to Jill once the refund is deposited.
2) Jake should explain that a taxpayer's federal or state refund cannot be deposited into a VITA/TCE volunteer bank account and she will have to open an account in her own name to have the refund direct deposited.
3) Jake can suggest she borrow a bank account number from a friend because the taxpayer's name does not need to be on the bank account.

Answer 1

Jake should inform Jill that her refund cannot legally be deposited into his account, nor can she use a friend's account, due to IRS regulations. Jill must either open her own bank account for a direct deposit or accept a paper check.

Step-by-step explanation:

Jake should explain to Jill that according to IRS regulations, a taxpayer's federal or state refund cannot be deposited into the bank account of a VITA/TCE volunteer. It is against policy and could be seen as unethical and potentially illegal. All refunds must be deposited into an account that bears the taxpayer's name. Jill will need to open her own bank account, or alternatively, opt for the paper check method. No matter how slow the government is in sending you a tax refund, the rules around the deposit of the refund are strict and cannot be bypassed by using a volunteer's bank account or by borrowing an account from a friend.