IRS does not cash my check correctly

That's at the bank, not IRS...

Yep, it's a bank error (or yours) even if an IRS clerk (or contractor) typed the magnetic characters at the bottom of the check.

I seriously doubt that the person doing that typing used anything other than the check itself as a source for the numbers. Are you sure you didn't write the check for $12,000?

How would the bank know that my check was for the exact amount of tax owed? My guess is this is all done electronically , so someone at IRS manually enters an amount to deduct an amount from my checking account. By habit they enter the full tax you owe.

Anyways, I have ordered a copy of this check from my bank so will see what it looks like. There is a very small chance I wrote it out incorrectly...

Years ago I wrote a check for a credit card payment. Say $156.25 for example. Check cleared for something like $135.00. CC company credited my account for $135.00. I believe that the CC company entered $135.00 electronically on the check before sending it to the bank. (I think I could see it on the cancelled check but not sure now.) No significant harm, no foul? Ivan

Woman owed the IRS $1200 and the state $300. She inadvertently put the IRS check with her state return and vice versa. The state deposited the check and it cleared. The IRS sent the check back and wanted their $1200, payable to them. But she didn't have $1200 in her checking account. The state said they would take 6 weeks to "correct" the error and issue a refund. The consumer show was shunning the state for causing the woman to pay interest and penalties for six weeks. As "dbp" said, it's the banks fault for accepting the state's deposit as the check was not made payable to the state treasurer. I don't know why they didn't go after the bank.

The last time I looked (some time ago) the IRS processed taxpayer checks directly through the Federal Reserve. They would be known as the collecting bank. Your bank would be known as the payor bank. Each bank must exercise ordinary care in processing checks. As the amount sent for collection is electronically coded (your bank is not going to use your actual check to make payment), your bank is off the hook if they responded to a $12,000 request for payment. The problem is either with your memory, the IRS employee who recorded the deposit information, or the Federal Reserve Bank that sent the collection request. Good luck trying to collect $25 from those guys.

Assuming your memory is not faulty, your bank should make good on the $25 out of the goodness of their heart.... customer concession as you were not at fault. Naturally, you would have to present the endorsed check or I assume an image, that shows the amount was not $12K.

I wanted to chime in on the "someone somewhere typed the wrong info for my check" issue.

You mail a check to the IRS, or to me for that matter, and it first goes to MY bank where it gets coded into MY bank's system. Then, via the magic of electronic never, never land, my bank goes and gets the money from your bank. Eventually YOUR bank gets the check and "clears" it. Let's pause for a moment here.

When you look at your canceled checks you'll see numbers across the bottom. The ones on the left side are the Bank's Routing number, your account number and your check number. The numbers on the bottom right of your canceled check show the amount the bank cleared the check for. So when you do your bank reconciliation at the end of the month COMPARE what the bank encoded on the check with what you wrote the check for to make sure it cleared for the right amount. Now, back to the show -

When I get your check there is NOTHING for me to do but take it to the bank and give it to them for processing. Generally, when you mail a payment to any taxing authority it goes to a different address then if you have a refund or ZERO due return. This is because most of the time its going directly to the bank for processing. The bank does its thing and notifies the company being paid that your payment came in so they can update your account in their internal Accounts Receivable.

I do not believe that the IRS or any of the taxing authorities do this any differently than any other business. I would be very surprised to find out that ANYONE at the IRS has access to your bank's internal systems - the ones where the bank actually make payment on your check, either electronically or otherwise. So I doubt seriously that this was the fault of anyone at the IRS.

Since your check should have been returned to YOU for insufficient funds, check to see what you actually made the check out for. At the end of the day I suspect, like many responders to you have already mentioned, that this is EITHER due to you making the check out different from what you thought you did OR its a bank issue. Either way, your check will tell you.

I'd be shocked and surprised and to find out the IRS had ANYTHING to do with this at all.

Good luck, Gene E. Utterback, EA, RFC, ABA

Actually banks rarely if ever actually clear checks except by expiration of a waiting period. Banks are notified if a check bounces, but are not normally notified separately that a check clears. The waiting period is sufficient so that the check, if bad, should have bounced by that time.

That's not always the case. I heard about one case where someone deposited a check in his account on a bank, where the address of the bank on the check was a different federal reserve district. The encoding at the bottom of the check was for yet a different bank in a third federal reserve district. That set-up confused the system so much that nobody realized the check wasn't good until after the waiting period, after the payee had closed his account and gone.

Look at a cancelled check? You assume that people and banks are still operating the way they were before the "Check21 Act." Some time ago (about

2 years), Bank of America STOPPED sending actual checks back, and in January, they stopped printing images of the checks on the monthly statements. As BofA is one of the largest U.S. banks, their practices are "it" for many U.S. taxpayers.

Another bank, HSBC, also does NOT include images of checks on statements, but one can pull an electronic image via their web site if one has registered one's account for electronic access over the Internet.

Maybe even in 10 more years, the issue will be, "what is a check?"

Here, J.P.Morgan Chase now accepts iPhone images of checks for deposit. Watch their advertisements!

For normal return processing, I agree. However, there are different paths for checks when an IRS function handles the payment directly (i.e. at audit, or enforced collection by an RO). In those latter cases, last I heard, the IRS still had a "teller function" which encoded the checks directly.

I finally got a copy of the check and it was my mistake . For the amount I wrote 12k in digits, but where you spell it out I wrote 8k. So now the new problem is how do I get a refund for the 4k in overpaid taxes?

In theory you could get it back from your bank. Under the law the written amount supersedes the numerical amount on a check, and they only should have paid what the words said, not what the letters said.

In practice it is not likely to be that simple. But call them and see if they can help.

What refund? Since the check bounced, the IRS didn't get any of your money. Upon receipt of your check, the IRS would have credited your tax account for either $8,000 or $12,000 (depending upon how they read the amount). When the IRS receives notice that the bank bounced the check, they will reverse the credit, assess a bad check penalty @ 2% of the payment amount ($160 or $240), and charge you late payment penalty and interest on the unpaid $8,000 tax due on your return (since they didn't receive good payment by the due date).

I forgot to mention the IRS tried to cash my check again a week after it bounced. Since I had enough funds in my account, it went through. So it looks like if it bounces, they automatically try it again a week later or something...

The IRS should automatically refund the overpayment. If you haven't gotten it within a couple of weeks after the payment cleared, call them.

Phil Marti Retired IRS Collection

So, since as Stuart's note that the written amount is supposed to control over the figures if they are not consonant, you might try to get the overdraft charge refunded by the bank if there were sufficient funds for the lesser (written) amount at the time.

Probability of joy is probably inversely proportional to the size of the bank and directly tied into the length and depth of your personal interaction w/ individuals beyond and above the window tellers or the electronic services in the local branch office.

Per IRS Tax Topic 206 - Dishonored Payments, "The Internal Revenue Service does not submit checks or other commercial payment instruments a second time for payment. The re-submission of a payment would be in the hands of the clearinghouse. When a check or other commercial payment instrument is not paid, the clearinghouse frequently resubmits it to the bank."