The IRS will introduce new procedures for issuing refunds starting January 2015 to fight identity theft and tax fraud. According to the new system, the IRS will limit the number of refunds that can be electronically deposited into a single financial account to three refunds. Financial accounts include checking and saving accounts, debit cards, and any prepaid cards.
If you have one financial account where you want the IRS to deposit your tax refunds, you will only be able to receive up to three refunds in that account, starting next year. If you request that more than three refunds be deposited in your account, your additional payments will be automatically issued via paper check and sent to you at the address you have registered with the IRS. In such a case, the IRS will inform you that your financial account cannot accommodate more than three refunds and that they will send your check through mail. You can expect the mailed refund to reach you in about four weeks.
The IRS has introduced this new rule to prevent tax fraudsters from receiving multiple tax refunds in their bank accounts. As the IRS will send the excess refunds through a paper check, it will be more difficult for fraudsters to wrongfully obtain a multitude of refunds.
The new process will also prevent fraudulent tax preparers from having their clients’ refunds routed to their accounts. This rule may not impact the majority of Americans who typically expect only one or two refunds. Alternatively, those taxpayers whose parent’s and children’s refunds are deposited in the same family-held account may be affected.