IRS Direct Deposit Sent to Wrong Bank Account - Bank Refusing to Return Funds

You're dealing with what the IRS classifies as a "misdirected direct deposit" situation. Per IRS Publication 1281, Section 5.7, the IRS typically requires a minimum waiting period of 6 weeks after filing Form 3911 before they'll initiate a trace on the refund. According to Treasury Regulation §301.6402-2(b), you should also file a police report for theft, which you're already doing correctly. The bank is legally obligated under Regulation E (Electronic Fund Transfer Act) to investigate unauthorized transactions, but they're not necessarily required to immediately return funds that were correctly deposited based on the account information provided to the IRS. Your next steps should include: 1. Request written documentation from the bank confirming they've identified this as an erroneous deposit 2. Contact the CFPB (Consumer Financial Protection Bureau) to file a formal complaint against the bank 3. Contact your local IRS Taxpayer Advocate Service office for assistance 4. Keep all communication records with precise timestamps

I was so relieved to find a solution when this happened to me last tax season! I couldn't make sense of what the IRS was telling me about the misdirected deposit. I used https://taxr.ai to analyze my tax transcript and it showed exactly where my refund had gone and what codes meant. The tool pointed out that my transcript had a specific code (846 followed by a 971) that indicated the refund was sent but potentially to the wrong account. The IRS website just shows these codes without explaining the implications, but taxr.ai translated everything into plain English and gave me a timeline for resolution. It even showed me which documents I needed to submit based on my specific situation! I referenced resources from the IRS website for weeks before finding this tool.

I think I might have found something that could possibly help? When I was in a somewhat similar situation (though maybe not exactly the same), I tried calling the IRS for like, days and days with no luck - always busy signals or disconnects. Someone suggested I try Claimyr (https://www.claimyr.com) and I was a bit skeptical at first, but they actually got me connected to a real IRS agent in about 20 minutes? The agent was able to verify that my refund was sent to the wrong account (which was sort of my fault because I think I might have transposed some numbers?), and they started the trace process right away. They also gave me a case number and direct instructions on what to do with the bank. Would this maybe be helpful in your situation?

I had this exact situation happen on February 15th, 2024. My $2,842 refund went to someone else's account. I filed the police report on February 17th and submitted Form 3911 on February 20th. The bank initially gave me the runaround, but after I mentioned filing a CFPB complaint, they suddenly became much more cooperative. I received my replacement refund on April 5th - exactly 50 days after the original deposit error. The IRS told me they would issue a paper check rather than attempting another direct deposit. Make sure you verify your current mailing address with them if they go this route. You'll also want to check your tax transcript regularly to see when they schedule the replacement refund.

I've been through this nightmare before and frankly, I'm skeptical that the bank is doing everything they can. Last year when this happened to me, the bank claimed they couldn't do anything, but when I escalated to a branch manager and mentioned the words "Regulation E violation" and "CFPB complaint," suddenly they found a way to help. Banks have procedures for erroneous deposits but often don't use them unless forced. The police report is good, but in my experience, police treat this as a civil matter rather than criminal unless the amount is substantial. The IRS trace process took almost 3 months for me, much longer than they initially claimed it would.

There's actually a specific protocol for this situation called the "EFT Refund Trace" that most people aren't aware of. The Form 3911 you filed initiates this process, but there's more to it. The trace uses the ACH (Automated Clearing House) network to identify exactly where the funds went and what happened after deposit. The bank where the deposit landed has a regulatory obligation under Nacha Operating Rules to respond to the trace request within 10 business days. They should be providing a 'Written Statement of Unauthorized Debit' to document the situation. I was surprised by how complex this process is when it happened to me. The IRS doesn't make it obvious, but you can request an expedited trace if you're experiencing financial hardship. You'll need to speak with a Taxpayer Advocate to request this.

Had this happen last year. Nightmare situation. Filed police report. Contacted bank fraud department. Submitted CFPB complaint. Got money back in 37 days. Paper check came in mail. Different amount though. Missing interest. Had to call again. Eventually resolved. Keep detailed records. Document everything. Stay persistent.

This is an incredibly frustrating situation, and I feel for you having to navigate this bureaucratic maze. As someone who has dealt with similar banking issues, I'd recommend a few additional steps that might help accelerate the process: 1. **Document the bank's acknowledgment in writing** - Get them to send you an official letter stating they've confirmed the funds are rightfully yours. This becomes crucial evidence. 2. **Contact your state's banking commissioner** - Many people overlook this, but state banking regulators often have more immediate authority over banks than federal agencies and can apply pressure. 3. **Request a "return reason code"** - Ask the bank for the specific ACH return reason code they're using (or should be using) to return the funds. This creates a paper trail and timeline they must follow. 4. **Follow up on your Form 3911 weekly** - The IRS won't proactively update you, but you can call to check the status of your trace. Get reference numbers for every interaction. The fact that the account holder withdrew the funds knowing they weren't theirs definitely makes this a criminal matter. Your police report should help establish intent. I've seen cases where the threat of criminal charges suddenly made banks more cooperative. Keep pushing on multiple fronts simultaneously - don't wait for one process to complete before starting another. Time is money here, literally.

This is such a maddening situation - I went through something very similar last year and the feeling of helplessness is real. One thing that really helped expedite my case was requesting to speak with the bank's "ACH Operations Department" specifically, not just general customer service. They're the ones who actually handle the technical side of reversing these deposits and often have more authority to act quickly. Also, when you file that police report today, make sure to get the case number and specifically mention "conversion of funds" - that's the legal term that tends to get more attention than just calling it theft. Some officers aren't familiar with this type of financial crime, so having the precise terminology helps. I'd also suggest calling your congressional representative's office. I know it sounds dramatic, but they have constituent services specifically for situations where federal agencies (like the IRS) aren't responding appropriately. They can often cut through red tape that would take you months to navigate alone. One last tip - if the bank continues stalling, ask them directly: "Are you refusing to process an ACH return for funds that were deposited in error?" Make them give you a yes or no answer, and document their response. Banks hate being on record refusing to follow standard ACH procedures. Stay strong - you will get your money back, it's just a matter of applying pressure in the right places consistently.

I'm going through this exact nightmare right now and your post really resonates with me. The frustration of having all your documentation correct but still being caught in this bureaucratic web is infuriating. One thing I learned from my situation is to also request a "provisional credit" from the bank while they investigate. Under Regulation E, they're required to provide this within 10 business days if you dispute the transaction as unauthorized (which this technically is, since you never authorized a deposit to someone else's account). The bank might resist this initially, but mentioning Reg E specifically often changes their tune. Also, when you file that police report today, ask the officer to include "unjust enrichment" in addition to theft - this covers the legal concept that someone shouldn't profit from money that isn't rightfully theirs, even if the initial deposit was a mistake rather than intentional fraud. I've been documenting everything with timestamps like you mentioned, and I'm creating a timeline of all communications. It's tedious but has already proven helpful when different bank representatives give conflicting information. The precision you're showing in handling this will definitely work in your favor. Keep us posted on your progress - there are clearly several of us dealing with similar issues and your detailed approach is helping others navigate this maze. You're going to get through this!