Tax News
How to Handle Misdirected Direct Deposit Refund (DDR)

We process millions of DDR requests each year and receive rejections on approximately 60,000 DDRs due to incorrect routing or account numbers. Annually, we receive approximately 450 requests to research missing DDRs. These missing deposits generally are found in the taxpayer’s bank account; however, some are discovered deposited in a third-party’s account because the taxpayer provided an incorrect routing or account number. This type of errant deposit is called a misdirected DDR.

There are two simple ways you can prevent a misdirected DDR from happening. First, before using the banking information from last year’s return ask your client if they have changed their banking information during the year. Second, remind your client to check the banking information on the return before submitting the return for processing.

How to resolve a misdirected DDR

If your client has not received their DDR, they should wait at least 25 working days from the authorized date of the refund (seven days for e-file returns and eight weeks for paper-filed returns) before calling us. When they call, our agent will verify that the return was filed, the routing number and bank account information. Your client will need to fax the agent a bank statement showing that the deposit was not made to their account. Once we receive the fax, we will send your client FTB 3851, Taxpayer Affidavit of Misdirected Refund Deposit to complete and return to us. In addition, the taxpayer must notify their bank or financial institution in writing of the error and file a police report. Copies of the letter and the report must be attached to FTB 3851. After we receive FTB 3851 from the taxpayer, we will contact the bank or financial institution where the misdirected refund was deposited requesting information on the account holder who received the misdirected refund. Although, the bank or financial institution is required to provide us with the information within seven days of receiving our demand for information, it sometimes takes longer for us to receive the information. Once we receive the information from the bank or financial institution, a paper check refund will be issued to the correct taxpayer.

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