Most ACH payments have already arrived at banks; however, the IRS is making a new effort to reissue payments that were previously rejected. The IRS announced on January 11 that it will reissue payments to taxpayers who did not receive them because they were initially sent to closed temporary accounts associated with tax preparation companies.

The federal government will begin to reissue ACH and check payments during the week of January 26. ACH payments processed for distribution on January 26 will have an Effective Entry Date of January 29.

If the reissued payments still do not reach taxpayers’ accounts as intended (e.g., receiving account is now closed), then taxpayers will have to file for a credit with their 2020 tax return. No action is required of taxpayers to receive a reissued payment. The federal government will only reissue payments that failed to reach accounts and were returned by financial institutions to the Bureau of the Fiscal Service.

ICBA is closely monitoring the situation and is in contact with the IRS and the Treasury department and will provide updates as soon as they are available.

The government anticipates it will send more than 145 million new Economic Impact Payments. If the IRS does not have account information on file for Direct Deposit, then individuals may receive a check or prepaid debit card. The IRS estimates 26 million will be checks and 8 million will be debit cards.

Approximately 113 million EIP transactions will be sent as ACH payments amounting to $112 billion, and an additional 34 million will be distributed as checks or debit cards amounting to $30 billion via USPS. The first tranche of ACH payments will have an effective pay day of Jan. 4, 2021. The checks are dated Jan. 6. 2021; the Treasury department has advised they will honor checks that are presented prior to this date. Treasury will be mailing 5 to 7 million checks per week until mid-January.  Prepaid cards will begin to be distributed next week at a rate of 3 million per week until mid-January. The legislation states payments must be processed by Jan. 15, 2021.

In response to several million taxpayers failing to receive their EIP2 payments, the federal government will begin to reissue ACH and check payments during the week of January 26. If the payments still do not reach taxpayers’ accounts as intended (e.g., account is now closed), then taxpayers will have to file for credit with their 2020 tax return. No action is required of taxpayers to receive a reissued payment. The federal government will only reissue payments that failed to reach accounts and were returned by financial institutions to the Bureau of the Fiscal Service.

We will provide updates on the late January distribution as information is made available.

Please be aware that the Treasury department has added new routing and transit numbers and data values for ACH EIPs.

Yes, the IRS created a website earlier this year to provide additional information to individuals, businesses, and more. However, please note that the information on these websites will likely be updated as the IRS prepares to distribute the payments.

• IRS Coronavirus Tax Relief and Economic Impact Payments – Main Page
• IRS Economic Impact Payment Information Center – Frequently Asked Questions
• EIP Card – Frequently Asked Questions

For EIP2s made by ACH with a settlement date of Monday, January 4, 2021, an RDFI is required to make funds available for cash withdrawal by 9 a.m. (in the RDFI’s local time) on that date.

We will provide updates on the late January distribution as information is made available.

The IRS database will be used to determine routing and bank account numbers for qualified individuals. Per the signed legislation. the full credit amount is $600 per individual, $1,200 per couple, and $600 for dependent children under the age of 17.

It is available for individuals with AGI at or below $75,000 ($112,500 for heads of household), and couples with AGI at or below $150,000. If you have children, you will receive an additional $600 per child.

For those above this income level, the amount will be reduced by $5 for each $100 your AGI exceeds the above thresholds.

This means:

• An individual without children will not receive any EIP funds if their AGI exceeds $87,000.
• A couple without children will not receive any EIP funds if their AGI exceeds $174,000.
• A family of four will not receive any EIP funds if their AGI exceeds $198,000.

The legislation states EIPs are exempt from garnishments. The EIP payments made via ACH will include an identifier (XXTAXEIP2) to distinguish the payments from tax refunds the first EIP. Please note that the “XX” in the identifier indicates that the payments are not subject to garnishment. EIPs sent as a check will feature a check symbol in the MICR line (40436) and may also require visual inspection to validate that the check is an EIP.

Also, please note that Economic Impact Payments are not subject to reclamation by the Department of the Treasury or the Internal Revenue Service. For more information about the reclamation process, including the types of payments subject to reclamation, please see Chapter Five of the Green Book.

Yes, banks are permitted to post payments based on the account number only. Nacha’s ACH Rules state in Subsection 3.1.2 that a receiving bank “may rely solely on the account number contained in an Entry for the purpose of posting the Entry to a Receiver’s account, regardless of whether the name of the Receiver in the Entry matches the name associated with the account number in the Entry."

Moreover, the Green Book notes that a bank is “not required to manually verify that the name on the ACH entry matches the name on the account at the time the payment is posted.” It goes on to state that a receiving bank “is only liable for posting the payment to the account in the ACH credit entry.” For more information, please see Chapter Two of the Green Book.

According to information in the Green Book (page 4-2), the RDFI should return the payment.

The Green Book states in Chapter 4 that all ACH payments must be returned in accordance with the Nacha Operating Rules and Guidelines, including when an account is closed or does not exist.

Most ACH returns to the IRS will result in a paper check being issued; therefore, RDFIs must make appropriate use of Return Reason Codes. Please see: https://fiscal.treasury.gov/reference-guidance/green-book/chapter-4.html

The legislation only excludes persons who passed away prior to January 1, 2020 from being eligible to receive a payment. The IRS is determining eligibility for all payments before they will be sent to customer bank accounts.

The IRS announced that the 2021 tax-filing season will begin on Friday, February 12. For additional information, see the IRS announcement. Those who didn't receive a payment or only received a partial payment may be eligible to claim the Recovery Rebate Credit when they file their 2020 tax return. Tax preparation software, including IRS Free File, will help taxpayers figure the amount.

The IRS will use the most recent Direct Deposit account information that it has on file to issue payments via Direct Deposit.

Due to the short time frame in which the IRS distributed most EIP2 payments, there was not enough time to provide updated account information to the IRS. Individuals who closed their account or changed financial institutions will receive the payment via another method, such as a paper check.

The IRS has established a site called “Get My Payment” at https://www.irs.gov/coronavirus/get-my-payment. This site provides information on payment status and payment type. The IRS updates this site on a daily basis.

Most individuals will receive their payment electronically. This is faster than mass distribution of paper checks. 

If you filed taxes 2019 and provided on your tax return your bank routing and account number for payments or refunds, and this information has not changed, the IRS has the information it needs to send your payment electronically, with no action required on your part. 

If you are a Social Security recipient, the IRS will use the direct deposit information held by the Social Security Administration. If the Direct Deposit information you have provided in the past is for a bank-issued, prepaid debit card, you will receive your funds on that card account. Individuals receiving disability benefits, railroad retirement, or veterans benefits do not need to provide additional information to receive their payments.

The IRS worked with the relevant federal agencies to access the relevant information to distribute payments in the same manner as those individuals receive their regular benefit payments (e.g., direct deposit to their bank account). Also, some individuals received a prepaid debit card from the government instead of a check; the IRS will provide more information about how it will distribute debit cards.

If an individual is a non-filer or failed to receive some, or all, of their first Economic Impact Payment, please check out the IRS website to learn more about claiming the Recovery Rebate Credit on the 2020 tax return.

A large amount of funds will be disbursed in the coming weeks to qualifying individuals. Accordingly, there is a risk for fraud of various types. The IRS has announced various ways individuals can be on guard against fraudulent activities. See the notice. 

It is important to remember that banks or the federal government will never contact you by telephone, text or email asking for your account information. Do not provide any banking information to anyone claiming to be “registering you for your relief payment.” This is a red flag. 

For security reasons, the IRS plans to mail letters about Economic Impact Payments to taxpayers’ last known address after the EIP is sent. The letter will provide information on how the payment was made and how to report any failure to receive the payment. If you are unsure you are receiving a legitimate letter, the IRS urges you to visit IRS.gov to protect yourself against fraudsters. 

Those who receive unsolicited emails, text messages or social media contacts attempting to gather information that appear to be from either the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), should forward them to phishing@irs.gov.

Taxpayers are encouraged not to engage potential fraudsters online or on the phone. Learn more about reporting suspected scams by going to the Report Phishing and Online Scams page on IRS.gov.