After ProPublica posted a questionnaire about stimulus payment problems last Friday evening, around 1,400 responses flooded in. And it’s possible that some of these banks will extract fees before the stimulus money makes its way to those the government was trying to help.Ĭiti Tax customers aren’t the only ones facing problems. Now some of these waystation banks are sending the checks back to the IRS, saying in public statements they received them by mistake, causing significant confusion and delays. The bank takes out whatever fees are owed and then passes the remainder on to the customer. Because regulations prohibit tax prep companies from receiving refunds directly, a special, temporary account is created at a bank that plays the middleman. These customers don’t pay their tax preparation fees up front, instead opting to have the fee taken out of their refund. Each year, the tax refunds of more than 20 million Americans, including many of Citi Tax’s customers, take a detour. To disburse most of the remaining payments, the agency is planning to mail 81 million paper checks bearing the president’s name, according to an IRS budget document.īut for a large portion of the 80 million people, the IRS tried to reach last week, “direct deposit” is a bit of a misnomer. The first wave of payments sent out last week was targeted to less than half of those eligible: 80 million Americans whose 2018 or 2019 tax refunds had been directly deposited. The IRS estimates that it will send the $292 billion in CARES Act money to 171 million Americans. When the government tried to navigate that system to speedily get cash to its citizens, it ran into big problems. The tax prep business is built on a complex infrastructure designed to extract fees that many customers cannot afford. The stimulus problems are part of a constellation of pain faced by the poor in accessing CARES Act money, from the possibility that banks could seize the money to pay off debts to advocates’ fear that, when paper checks arrive, the check-cashing industry will snatch a hefty chunk. “Because we have an entire industry that survives on - and is a huge force in maintaining - this system in which they are third-party intermediaries, you end up with these delays and complications,” said Chi Chi Wu, an attorney at the National Consumer Law Center. The IRS’ difficulty in swiftly getting payments to Americans has a basic, root cause: There are multiple private actors sitting between the IRS and tax filers. The Georgia customers, almost all black women, are among the likely millions of Americans who are having trouble getting the stimulus funds they are owed. That bank sent the payments back to the IRS.Ĭiti Tax clients - just like some clients of big tax brands such as H&R Block, Jackson Hewitt, and TurboTax - didn’t get their money for the very reason Congress wanted to get money to them quickly in the first place: They are poor. With an officer from the Richmond County Sheriff’s Office beside him and another officer shouting for people to be quiet, the tax preparation company’s owner told the crowd of about 60, only a few of whom wore masks, that he didn’t have their money.īecause of the baroque machinery that runs the tax preparation industry, the IRS had sent the money to a bank Citi Tax works with but the customers had not heard of it. The IRS website told them their coronavirus stimulus checks were deposited in an account they didn’t recognize. Millions of Americans had received a big deposit from the IRS in their bank accounts, but they had not. Last week, a group of angry and desperate Citi Tax Financial customers gathered outside the company’s storefront in Augusta, Georgia. (ProPublica is a nonprofit newsroom that investigates abuses of power)
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |