Tax Refunds and Direct Deposit... Legality Issues.?

Question

My family has 3 different bank accounts: a joint account, which has existed for many years which bears both my husband's name and my name. Recently we both opened our own personal accounts. He does not use mine and I do not use his. His account is only in his name and visa versa. Utilities, food, mortgage, etc... are paid from the joint account. All previous tax returns involving direct deposit have gone into the joint account (it was the only account we had).

Today I discovered that our tax returns from both the state and the Feds had been deposited by direct deposit into my husband's personal account. There are 2 things that are particularly confusing. First... this personal bank account belonging to my husband, into whom the direct deposits were made, did not exist when we saw our accountant for the preparation of our taxes. Granted she was going to file electronically but arranging for our returns to be directly deposited into the account which belongs to my husband personally would not have been possible. This account was not set up until April 9th and we saw our accountant on March 9th. Did he somehow contact the accountant and make special arrangement to have these direct deposits go to his personal account instead of the joint? How do the Feds and state know where to deposit returns? That's a good question. Could this have been some kind of a mistake on their part? I don't see how since the account did not exist when we met with account to arrange everything, however... the account DID exist just before the taxes were filed by the accountant. My husband could have talked to her. If the issuer of the returns is made aware somehow, through a form included with the return or on the return somewhere, of where the funds should be deposited, my husband would have had time to let her know to change the account destination.... BUT...

Can he do that? If my husband did arrange for this to happen, which brings me to my 2nd confusing point, isn't that illegal? The returns are in my name as well as his. How could he make arrangements for them to be deposited into an account which does not bear my name? If we had received a paper check we both would have had to endorse it.
What are your thoughts on this? I’m interested in constructive and thoughtful answers please.

One more thing- If he was able to accomplish this is something wrong somewhere? Not enough checks and balances or something? How could he manage to do something so illegal, right under the Fed’s noses?

Answer 1

Your husband told the tax preparer to use that account.

Per the IRS Guidelines = it's determined by the finacial institution if joint checks can be deposited into an individual account. Your bank obviously, allows this.



http://www.irs.gov/newsroom/article/0,,id=105957,00.html

Answer 2

Once the tax return is filed, the IRS will NOT update the direct deposit information.



I suspect you and your husband did not actually pay the preparer for their services at the time the taxes were done, instead you agreed to have the fee paid from the refund. In order for that to happen, the preparer overlays the direct deposit information with a RAL account. After the fees are taken out, the RAL bank sends the remainder to the final bank account. Even then, the RAL bank is going to want to send them to the listed bank account, no changes. (You admit, however, that the taxes weren't filed until after the separate account was set up and that your husband could have called and said the joint account is closed, here's the new account number.)



Before you point fingers at the preparer, do you have proof the money went to directly to his separate account? As soon as it hit the joint account both you and your husband had the right to divert the money to a separate account. The bank would not be required to call the other spouse.

Answer 3

The IRS will send the deposit to the bank and indicate the account it is to go to. The most likely scenario is the the bank redirected the account to your husbands account based on his instructions. Since the check has his name on it they are OK doing it. (I assume it was a joint return.)