By Kurtis Ming

MODESTO (CBS13) – Newlyweds Craig and Katelyn Hilliker planned to use last year’s tax refund on a honeymoon cruise,
but that trip would have to wait.

Filing their taxes online for the first time as married, Katelyn learned she made one critical mistake.

“When I found out it was something I did, I was horrified,” she said.

When she entered their bank account number for direct deposit, she left off the 12th digit.

“One number just instantly takes $2,000 away from you,” said Katelyn.

The Internal Revenue Service and Bank of America didn’t catch it. The bank confirmed the total $2,000 in refunds for both state and federal taxes ended up in someone else’s account, and the Hillickers couldn’t get it back.

“We’re still being given the runaround,” said Craig.

And Katelyn says, “The money is still in another person’s bank account.”

Bank of America says the owner of that other account must give permission to return it, which apparently hasn’t happened.

“It’s a cautionary tale,” said Beth Mills of the California Bankers Association. She says the electronic payment system relies on numbers, not names. Matching them up on every transaction could cause the banking system to grind to a halt.

Mills advice, “Double-, triple-check the numbers you’re putting in there.”

We reached out to Bank of America which insisted, “The customer needs to contact the Internal Revenue Service and ask them to issue a recall of the funds.”

But the IRS said if the bank doesn’t return the money, you may have to sue the bank and the owner of the account.

“I definitely feel like the system is broken,” said Craig.

We had the Hillickers fill out a special form to the IRS, and after four months, they got their money.

It’s a mistake Katelyn won’t make again, knowing how much of a mess this has caused. She hopes others will be more cautious.

“Someone’s rightful money should be given back to them,” she said.

We were told this kind of mistake doesn’t often happen. But caution consumers that the IRS and banks may not compare your name to the account number before depositing money into an account.


Bank of America

This was an electronic payment made through the automated clearing house.

Rules governing ACH payments require the issuer of the payment to guarantee the accuracy of the account number that the receiving bank has been instructed to credit.

To correct the error, the customer needs to contact the IRS and ask them to issue a recall of the funds.

California Franchise Tax Board

When a taxpayer requests a direct deposit, but transposes numbers or mistakenly provides an incorrect routing number or checking/savings account number, the taxpayer’s refund may be misdirected to an incorrect account.

Best case scenario, there is no account at the taxpayer’s financial institution matching the incorrect account number, so the refund will “bounce” back to FTB and we re-issue it as a paper check.

In the case where there is an active account, there are three scenarios:

We contact the bank, which debits the funds from the incorrect account and returns the money to us. We then re-issue the refund.

We contact the bank, but the person who received the erroneous refund closed their account. If the bank tells us the individual’s name and address, we debit that person’s FTB account for the amount of the erroneous refund and begin collection action. We credit the taxpayer’s account and re-issue the refund.

The instructions to our tax forms warn:
Caution: Check with your financial institution to make sure your deposit will be accepted and to get the correct routing and account numbers. The FTB is not responsible for a lost refund due to incorrect account information entered by you or your representative.

Internal Revenue Service

IRS cannot comment on this case specifically

“IRS urges tax payers to double check their info on tax returns to insure it’s accurate before filing.”

Comments (2)
  1. This is one reason why there’s so much tax refund fraud. If no one compares the names, that means criminals can also use this loophole to move money into **their** accounts.

    Even a simple, very basic comparison of the taxpayer’s name with the name on the bank account would stop both accidental and intentional fraud. Example: validate the first four letters of the first name, and first seven letters of the last name. This type of automated validation is already done by Social Security when they verify social security numbers. The IRS should do the same.

  2. If the number she submitted really was missing a digit, that should have halted the direct deposit right away. The REAL PROBLEM is Bank of America’s procedures was dealing with the missing digit.

    The bank is making assumptions about what the missing digit might be, shifting the 11 numbers they did get, left or right, or adding a zero to make up for the missing digit. It’s part of their programming code, a set of instructions on what to do when this happens.

    And the bank prefers to keep the money, rather than reject the deposit automatically…that ulterior motive drives their programming. Better a wrong account, than no account at all. Just standard Banker’s Greed at work.

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