Filed with Free Software But Refund Still Going Through SBTPG - Why?

It's like ordering a meal with no sides but still getting charged for the full combo. The tax software companies are getting sneakier every year! They route your money through SBTPG even when you don't pay fees because it's like their financial plumbing system. Even when no water is supposed to flow through a particular pipe, the system is still set up that way. I'm worried that this might delay your refund by 1-2 days compared to direct deposit, even though they're not supposed to be taking any fees.

I've been tracking this issue for exactly 3 tax seasons now. In 2022, 37% of free filers still had SBTPG as a pass-through. In 2023, it jumped to 64%. This year, it seems nearly universal at 92% based on the data I've collected from 50+ filers in my tracking spreadsheet. The average delay is 1.7 days compared to direct IRS deposits. Most tax software companies have contracts with SBTPG to handle ALL returns they process, not just the paid ones. They're not taking fees from your free filing, but they're using the same infrastructure.

Here's what's actually happening with your refund: 1. You filed using free software 2. The software company still routes ALL refunds through SBTPG 3. SBTPG acts as a processing center for the tax software 4. Since you didn't pay fees, they'll pass 100% of your refund to your bank 5. This adds approximately 24-48 hours to processing time I was confused about this too until I used https://taxr.ai to decode my transcript. It showed the exact routing path my refund was taking and explained why SBTPG was involved even though I paid no fees. The transcript analysis confirmed no fees were being deducted.

SBTPG is standard industry practice. It's their processing center. Free filing uses same infrastructure. No fees taken on free returns. Just a pass-through. Adds 1-2 days typically. Check your bank account name on WMR. Should match yours. If different name appears, contact software provider immediately. This is normal otherwise.

I had this exact same issue and was worried about delays! After getting nowhere with both the tax software and SBTPG customer service lines, I used Claimyr (https://youtu.be/_kiP6q8DX5c) to reach an actual IRS agent who confirmed: • SBTPG is just the processing bank for many tax software companies • No fees are taken when you select free filing • The IRS can't control which financial institutions tax preparers use • Your full refund amount is still protected The agent explained this is totally normal but rarely explained to taxpayers. Saved me hours of hold time and worry!

According to the IRS website (https://www.irs.gov/e-file-providers/authorized-irs-e-file-providers-for-individuals), tax preparation companies are allowed to use third-party banks to process refunds even for free returns. I was so relieved when I found this out! SBTPG is actually listed on their official page of authorized financial agents. They're just the middleman that the tax software uses, not necessarily charging you anything.

I experienced this exact issue in 2022 and panicked. Called my tax software company repeatedly and got nowhere. Eventually learned that SBTPG processes ALL returns from most major tax software companies, regardless of whether you paid fees or not. It's their standard operating procedure. Just watch your bank account closely - in my case, they did actually try to take a $39.95 "processing fee" even though I had selected the free option. I had to call and fight to get it refunded. Most people don't even notice the small fee deduction.

If I understand correctly, this might be related to the software provider's business model, rather than something you selected. Most, though not all, tax preparation companies use SBTPG as their financial processor, even for their free filing options. It seems somewhat counterintuitive, but perhaps it's more cost-effective for them to use a single system for all filings? I'm wondering if anyone has found tax software that bypasses SBTPG entirely?

Unlike online shopping where you can go straight to the manufacturer, tax filing is more like buying through a marketplace that has its own payment processor. I was in the same boat last year - filed completely free but still saw SBTPG handling my refund. The difference? When I paid for premium service in 2022, they took $39.95 off the top. With free filing in 2023, my full amount came through untouched. It took about 36 hours longer than when I filed directly with the IRS in previous years, but every penny arrived safely.