Tax Rebate Problems

By | May 17, 2008

Some glitches in the system caused a lot of 2008 tax rebate (stimulus) checks to be sent to the wrong bank accounts.

This glitch could effect millions who are expecting their tax rebate checks, to not receive them until possibly late July.

One of the main problems is tax payers who took out a RAL (refund anticipation loans) and also some tax payers who allowed their tax preparer to take the fees right from their refund.

When a person gets a RAL the bank sets up a temporary bank account for the tax payer. Then when the IRS approves the tax payer’s refund the bank sends the tax payer their money minus the RAL fees. When the bank receives the refund from the IRS they then move the money to their own account and close the temporary account.

Well, since the IRS is paying the Rebates via direct deposit (for those who used direct deposit of their refunds) the IRS sent the rebates to millions of closed bank accounts.


Tax Rebate Problems

The IRS prior to April 15th made a few statements regarding who could and could not use direct deposit, but failed to provide details on the refund anticipation loan issue until May 7!

The glitch is due to a technical problem, according to major tax preparation firms and the major tax preparers say the government is to blame for taxpayers’ confusion.

“The IRS decided how people were going to get paid,” said Nancy Mays, an H&R Block spokesperson. “This is not in any way an H&R Block issue.”

At, the software company noted the economic stimulus program became law Feb. 13 and the IRS only announced its rebate schedule in mid-March.

“My expectation is for folks who filed early, in late January or the mid-February time frame, they would not have known. We would not have known,” said Julie Miller, a spokesperson for Intuit Inc, the company that produces TurboTax.

Anyone who used TurboTax’s Refund Transfer service will have to wait for a paper check.

Other issues are that tax payers did not receive the right rebate amounts. Some are missing the $300 per child while others didn’t get the $1,200 for married couples.

Some of our customers here at have reported that they have received their rebate checks OK, while others are still waiting.

Read more at the IRS Frequently Asked Questions. You can also call the Tax Rebate Hot Line number at 866-234-2942, be prepared to wait on the line for a long time.

Faced with a deluge of phone calls, the IRS is urging taxpayers to go to its Web site,, for more information. ”We encourage people to be as patient as they can,” Lemons says. “Calling on the phone won’t help people get their payments any quicker.