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Furious TurboTax and H&R Block customers demand their $600 stimulus — IRS says some checks were sent to inactive bank accounts

As 2021’s first week kicks off, funds from the second round
of stimulus checks are starting to become available — but not necessarily for
some H&R Block and TurboTax customers who are now venting online.

Customers for the two major tax-preparation companies took to Twitter. TWTR, -1.19%, often in salty language, a week after Treasury Secretary Steven Mnuchin said the Internal Revenue Service would begin the $600 check-distribution process.

Mnuchin said the direct-deposit distribution process started last Tuesday night and the IRS would start dropping checks in the mail one day later. For taxpayers, the payments are based off what they earned in their 2019 tax returns, which are the ones people filed in mid-July or mid-October if they got an extension.  The IRS says it’s using the banking information it already has on file from those returns.

Monday, Jan. 4, marked the date when the funds first formally became available for use, the IRS said, even though some people may have seen the money as provisional or pending in their accounts before that.

But at a time when many people need a cash infusion, the money’s not available, according to some angry social-media users.

Both TurboTax INTU, -0.76% and H&R Block HRB, +1.09% told MarketWatch they are doing everything they can to pass along stimulus money as soon as possible — and both emphasized it’s up to the IRS when to send the money.

(“The payments are automatic,” the IRS said Monday, “and people should not contact their financial institutions or the IRS with payment timing questions.”)

On Tuesday, the IRS said, “Because of the speed at which the law required the IRS to issue the second round of Economic Impact Payments, some payments may have been sent to an account that may be closed or, is or no longer active, or unfamiliar.”

It reiterated that financial institutions can’t hold and issue payments to people when the account isn’t active and the money has to be sent back. The IRS said it was it was working on a “compressed timeline” and didn’t have time to reissue and mail checks.

The solution for people with stymied stimulus checks was filing their 2020 tax return as soon as possible once tax season started and claim the Recovery Rebate Credit for the stimulus check then.

Don’t miss: Is my stimulus check taxable income? Will it reduce my tax return? Burning questions about the second COVID-19 stimulus

“We know how
important these funds are for so many Americans and that everyone is anxious to
get their money,” a TurboTax spokesman said, noting that the IRS received
accurate banking information.  “We are
partnering with the IRS to help taxpayers receive their payments as quickly as

If someone’s Turbo Visa Debit Card account was closed or inactive, the bank will return the stimulus money, according to a TurboTax FAQ.

At H&R Block, a company statement said, “We immediately deposited millions of stimulus payments to customers’ bank accounts and onto our Emerald Prepaid Mastercard yesterday, and all direct deposits are being processed.”

If the IRS ‘Get My Payment’ portal shows an account number the customer doesn’t recognize, the company said H&R Block customer service can help at 1-800-HRBLOCK or @HRBlockAnswers.

The economic impact payment money that was sent to closed accounts “affected less than 1% of second stimulus payments processed by H&R Block,” a company press release said Monday.

The angry wait echoes distribution glitches during the first round of checks, as well as an episode from last week, some Wells Fargo WFC, +2.79% customers trained their Twitter ire on the bank. That wasn’t lost on at least one person.

Wells Fargo said it’s supporting customers “as quickly as possible” and the bank has processed all direct deposits its received so far from the IRS. People who were wired money effective for automatic deposit on Jan. 4 could use it as soon as Jan. 1, a spokesman said.

“The U.S. Treasury has indicated payments will be distributed in multiple phases, and not everyone will receive funds at the same time,” he noted.  

The bank’s branch and contact center staff don’t have extra information on whether customers will get paper checks, pre-paid cards or the timing that electronic payments post, he added.

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