It’s that time of year! During tax season, financial institutions (FIs) can expect to see a rise in government ACH exceptions due to fat-fingered account numbers, closed accounts, deceased recipients, and more.
Government payments have their own set of ACH guidance, provided by the Bureau of the Fiscal Service’s The Green Book. For instance, when a Tax Refund payment is misdirected to the wrong account, the Green Book (Page 1-8) states:
Payments must be returned when they cannot be properly posted by the financial institution. NOCs cannot be used to correct any information. In instances where a Direct Deposit IRS tax refund is unpostable and returned, taxpayers will receive a check in place of a Direct Deposit payment. The financial institution’s responsibility is to post the Direct Deposit payment to the account indicated on the ACH record. If the funds are posted to a valid account that turns out to be incorrect, the financial institution is not liable to the government for the return of the funds. If the taxpayer or the taxpayer’s agent gave the incorrect account information, neither Fiscal Service nor the IRS will assist the taxpayer with recovering the funds. The taxpayer is free to pursue civil action. If, however, the IRS made an error, it will make the taxpayer whole.
Contact the SFE Answerline or email info@sfe.org with any questions you may have!*