Take The IRS’ Screw Up As a Learning Curve for Building Your Own Financial Success

Weekly Sunday Thoughts: April 19, 2020 1:22 PM EDT

My sister, while very disappointed and slightly upset, did not use Wednesday’s IRS’ BIG Screw-Up to harbor anger nor to get her down. She is using this situation as a means to educate herself on why it is important to have your finances in order. She is using this as an opportunity to create a plan of action for all future financial transactions: building a strong portfolio of success and seizing opportunities to possess multiple streams of income.

This is the road to financial independence and a solid method for not depending on financial products such as the Refund Anticipation Loan (RAL) or Refund Anticipation Check (RAC), advance loans, which tax offices offer during tax time. And, although I am in the tax service business, as a humanitarian, these loans are predatory as they prey on the desperate and poorest in our community in need of any temporary fix. Unfortunately, this year these loans created additional issues for needy families as many tax office customers who received their 2019 IRS tax return refund checks in the form of advance loan products i.e., RALs or RACs, did not receive their stimulus money.

This occurred because tax offices listed dummy bank accounts on customers’ tax returns; the dummy bank account served as a loan guarantee mechanism: tax offices were able to assess processing fees and print customers a refund check. This allowed the customer to immediately get his/her 2019 tax refund in advance of the IRS processing the return and releasing any refunds owed to the taxpayer at a future date. Unfortunately for many, this dummy account was the bank information that was listed on the taxpayer’s 2019 tax return which resulted in many taxpayers’ stimulus checks hitting the individual tax offices dummy bank account.

Another major issue per one report is that unfortunately, tax offices cannot in turn issue the customers their stimulus payments because those payments hit the tax offices’ dummy account which means that the tax offices don’t actually have the stimulus money in their bank account: “the tax office works with another bank when customers receive their tax returns” (Masse, 2020, para. 14). This statement means that the tax office does not own this dummy account and cannot access the account. In addition, the bank’s dummy account does not have the ability to print checks due to the checks are not associated with any of the taxpayers’ information such a name, address, or full social security number. 

Fortunately, Peter and Brown (2020) states that stimulus checks sent to the wrong bank account will be rejected by the bank and returned to the IRS. The IRS will then issue a paper check at some future date. Unfortunately, deposits hitting the wrong back account have added more stress to an already dire financial situation, but we must and can learn from this. Taxpayers must deal with their current financial crisis (proactive versus reactive) so that these temporary solutions i.e., RALs or RACs are not necessary – definitely easier said than done.

I would suggest taking charge of their finances by getting things in order. I would start a weekly or monthly budget that consists of only the absolutely necessary things needed to exist. This will require limiting the pleasure of spending in favor of saving one or two dollars for a rainy day. This will also require getting a bank account, a digital bank account, a credit union, or even a prepaid account to deposit funds. Ultimately, we must take control of our finances; put as much money away as you possibly can – obviously this will be pretty hard to do during a Global Health Pandemic – but this global epidemic is a time to reflect on how we can do better.

– Isaac Davis, Jr., MBA, HIFE CCP, The Small Business Guru


Brown, D., & Peter, J. (2020, April 16). Some stimulus checks are being sent to the wrong accounts: ‘The bank account number is not even close.’. Retrieved from https://www.usatoday.com/story/money/2020/04/15/stimulus-checks-going-wrong-bank-account-many-yes/5140966002/?fbclid=IwAR1rWrIr6aCbHL2LjOWNZHhowH-kJDiRqheVxIruVd8OnVNbOFkNUvViGV8

Masse, J. (2020, April 15). Stimulus payments causing confusion for taxpayers and tax preparation offices. Retrieved from https://www.fox13memphis.com/news/local/stimulus-payments-causing-confusion-taxpayers-tax-preparation-offices/WVOB2PCL7JE7PP7OX6JGOF3AZU/?fbclid=IwAR2Js2e-PHnQXprBu8R2Su_o5JJx4jsOR9hPmyrp9-P8_v8rAqlqsxZIxiY

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