I am posting this for the clerks in our operations area, so forgive me if I do not fully understand what I am talking about!

We are mixed up in a real mess involving a tax refund that was received through ACH. The customer's accountant put the wrong account number on the customer's tax return. The refund was sent to us and credited to the incorrect account number (the number was valid and belonged to someone else).

I will spare you the details of the nightmare that has ensued from this accountant's mistake but the person who we spoke to at the IRS told us we were violating a regulation by not matching the customer's name and SSN on the ACH to the customer's name and SSN on the account. They said we should have returned the deposit immediately because the customer's name and SSN on the ACH did not match the customer's name and SSN on the account.

Does anyone do this with all of their ACH deposits? I saw a printout of our ACH file for one day and it looks like it would take a month for someone to match like that.

Does the IRS know something we don't or are they making this up?

Thanks for your help.

Not all ACH entries have SSNs, so I am not sure how you would match them to the account. Did you receive a prenote on the deposit? If so, you may have a problem if you did not send back a NOC with the correct information.

If you did not receive a prenote, I would go to the NACHA 2002 Operating Rules, Section 4, Subsection 4.1.4 which states "If the account number and the name of the Receiver contained in an entry do not relate to the same account, the RDFI may rely soley on the account number contained in the entry for purposes of posting the entry to the Receiver's account."

This is my opinion and may not be that of my employer or the IRS.

The IRS functionary may be confusing roles in his/her statement. While it is true that IRS rules require that the account to receive a direct deposit tax refund payment belong to the taxpayer, the IRS does not send any form of prenote for these payments. For the IRS to expect that the receiving depository will verify the live payment for name/SSN agreement with account records is unreasonable.

Of course, your bank is going to do everything it can to resolve the situation, but the simple fact is that the IRS should be (and probably is) taking its ruler to the knuckles of the accountant, and not those of the bank.