'Where is my money?': Frustrated Americans left waiting for stimulus payments as IRS sends funds to wrong accounts amid COVID-19 pandemic

ByRenee Koury KGO logo

Thursday, April 23, 2020

IRS sends stimulus funds to wrong accounts, frustrating Americans

Those who used tax preparers and received their regular refunds as an advance were the most likely to see their IRS economic impact payments sent to wrong or dormant accounts.

SAN LEANDRO, Calif. (KGO) -- Millions of Americans received their stimulus checks this week. However, thousands are reporting their money landed in an account they never heard of. With everything shut down in the pandemic, they can't get answers. So - people from across the country reached out to the only place they could: our own 7 On Your Side.

We heard from consumers from as far away as Texas, Iowa and South Carolina - all counting on that money and wondering where it went.

When the IRS began sending stimulus payments to millions of Americans this week, Sharon Broussard of San Leandro felt a glimmer of hope.

"I'm definitely waiting because I've been laid off from my job and this was an opportunity to get some financial assistance," she said.

So she went to the IRS website and found her stimulus check was deposited -- but not to her bank.

"And the last four digits was 6865..." Broussard recalled.

It turns out her payment went to a temporary account with H&R Block - an advance on her tax refund, loaded on a debit card. But the card expired last year.

"This card is no good to me, it's invalid," said Broussard.

Broussard wanted H&R Block to renew the card so she could get her stimulus money - but the H&R Block offices are all closed.

She marched down there anyway.

"When I went down there, nobody answered the doors. So I took my keys and hit on the windows. My keys banged on the door so somebody could hear me," she said.

Someone finally did come out, and gave her a toll free number to call. Broussard says an agent there "found" her $1,200 stimulus payment - however, it would cost $35 to load it on a new card.

"They're gonna take the $35 from the stimulus payment. And that's a lot of money. I can use $35 to buy food and put gas in the car and pay the electric bill," Broussard said.

7 On Your Side contacted H&R Block. The company only said it would not charge such a fee, and in fact, its bank has now returned Broussard's money to the IRS!

Now it's not clear where her money ended up.

Tina Williams isn't sure about her payment either. She contacted us all the way from South Carolina. "You worry that, what if it went into somebody else's account and they get it?" Williams said.

Chi Chi Wu is an attorney for the National Consumer Law Center.

"These consumers will get their money at some point. Almost all of them will get their money. It's a matter of delay. I know it's incredibly frustrating... they need to buy groceries... even a delay of a few days feels like an eternity," Wu said.

Like Broussard, many had received those tax refund loans last year and the IRS mistakenly sent their money to those closed accounts.

"There were glitches, and the glitches affected hundreds of thousands... often these are the people who need the money the most," said Wu.

Broussard was counting on getting her check quickly. Now it seems her money is going in circles.

"That's why I'm frustrated, because where is my money basically?" she asked.

The IRS says banks should reject stimulus payments mistakenly sent to dormant bank accounts, and return the funds to the IRS. The IRS will then write a paper check to those consumers. However, it's still ironing out glitches. And hopefully soon, because another 160 million stimulus payments are about to go out.

Many consumers report their payments that went to closed accounts, were in fact returned to the IRS. However, the IRS website indicates those payments are scheduled to be sent back to the closed accounts on April 24. Frustrated consumers say their money seems caught in a never-ending loop. This appears to be what happened in the case of our viewer Sharon Broussard.

The IRS and tax preparation companies say they are working on a fix to a glitch that appears to be sending payments back and forth between closed accounts and the IRS.

The IRS has successfully delivered stimulus payments to about 80 million consumers by direct deposit. The National Consumer Law Center says "hundreds of thousands" were mistakenly sent to dormant accounts.

Those most affected by the payments going to closed accounts are those who received an advance on their tax refunds from their tax preparer last year, or who paid tax preparation fees through deductions from their tax refunds. The NCLC says some banks receiving those payments in error are writing checks to the rightful recipients, rather than sending them back to the IRS. Many consumers therefore may be receiving a check soon from their tax preparer's bank.

H&R Block says it is not charging fees to reload expired bank cards or to load stimulus payments into current customer accounts. Not only that, the company's Facebook page says those who have their stimulus payments loaded onto an Emerald debit card will receive a $10 credit.

Take a look at more stories and videos by Michael Finney and 7 On Your Side.

Get the latest news, information and videos about the novel coronavirus pandemic here

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