Direct Depost and the IRS

(First attempt at a GD thread, I’m kinda nervous…)
Federal and state governments seem to be pushing for the ‘direct deposit’ method of handling refunds. The state paperwork I received this year in the mail didn’t even include the option of a mail it in, we mail it back. It was instructions on either E-file or Tele-file. I had to get the traditional forms at the post office.
I’m wondering if anyone else other than ‘ol paranoid me has a problem with this. I learned through experience that if you give authorization for a direct deposit, you also give authorization for direct withdraw (in case any mistakes are made, I got screwed on this once, long story).
Now I know that if the IRS really wanted to, they could get any info they needed on your personal accounts, but is it really a good idea to give your account info up freely so it can be stashed in some database?
I dunno, maybe I’m being like those who thought man was never meant to fly, I mean the technology is out there to make the dreaded process of handling taxes so much more efficient, but I’m wary.
First, I’m certain that if we all complied with this, the bureaucracy would not be reduced at all.
Second, like I said, if you give the IRS permission to place money in your account you also give them permission to take money out.
Third, I think I’m supposed to say Hi Opal.
Until I see how this system works I’m staying away from it. I think it’s getting a little TOO connected to the federal government (I’m referring to the good ‘ol USA by the way).
Your thoughts ? Anyone ? Buehler ? Buehler ?

See ? I couldn’t even spell the header correctly. Have mercy, please. :slight_smile:

You didn’t get ‘Bueller’ right, either. :smiley:

I signed up for Direct Deposit this year, for the first time. If you have any problems, you can always go to your bank and rescind it.


I think that the reason that the Feds are so hot on this stuff is that they are trying to A) streamline the process and B) reduce the paperwork. If you didn’t itemize in the previous year, and had nothing but basic W2’s, they sent either the E-file or Tele-file form. otherwise, you got the usual paperwork

I suspect the IRS could get your bank information anyway, if they had to. I say this because if you get in trouble with them they can freeze your bank accounts. Therefore, they must have some way to discover where they are. I don’t think they could take back more than they put in, though.

I had a long episode with the IRS, which I finally won only when my congressman intervened. If you think it’s a risk, don’t take it - because you’ll never reach anyone there who will be empowered to do anything about it if there’s a problem.

Actually, there is nothing in the Electronic Funds Transfer (EFT) regulations to prevent it. KP is right – anytime you give someone authorization to deposit to your account via EFT (direct deposit) you also give them authorization to debit the account via EFT. Ostensibly this authorization would be invoked to correct any error(s) in the deposit(s), but standard EFT agreements do not limit the right of withdrawal to any particular reason(s) or amount. There is the risk, however slight, that the depositor could wipe out your account through malice or error. You would certainly be able to recover your funds through the legal process, but it could be a long, expensive battle.

In reality I have only seen this happen once in ~15 years of banking, so it’s exceedingly rare. Even then it was a depositor who was known to be “shady”. The account owner did not excercize the best judgement in allowing the EFT.

Life lesson #101 - Never trust anyone with direct deposit or automatic withdrawal whom you wouldn’t trust with your checkbook.

That said, I do allow direct deposit for my employer and the IRS. The risk there is exceedingly small.