The Perils of (MISS)directed Deposit

August 31, 2011 — 1 Comment

On a typical day, you may run the ATM to grab some money. After taking your cash and card, you get a receipt with your remaining balance. Just before you crumple the receipt and toss it in the trashcan, you notice an extra $110,000 in your account. What do you do?

Stephen McDow, was the person who had that mysterious luck. Although, his luck has turned into a greater misfortune that may result in imprisonment at a Federal Penitentiary. McDow opened his account one day and found the IRS issued a tax refund for $110,000 that was intended for a 67-year old woman. As a result of this mistake, McDow used the money to pay off personal expenses, like student loans and mortgage payments. As responsible as his spending was, the IRS found out about their error and understandably took action against McDow. Now, he is faced with a $110,000 bail (ironic, yes) and potentially four years behind bars.

This is where things went wrong: the 67-year old woman changed her bank account number without notifying the IRS, and McDow was the man who inherited her previous number. Thus, when the IRS registered the tax fund under her bank account, it went right to McDow’s hands. After discovering that McDow had her money, the woman demanded it back, yet McDow had spent nearly half of the refund. He offered to pay back $65,000 with monthly payments until the money had been fully reimbursed. The woman declined.

What can we learn here? When changing financial information, including bank account numbers, routing numbers, and addresses, be sure to notify the proper authorities, particularly at the IRS. Furthermore, when filling the information out, check to confirm you wrote down the correct numbers or else some other McDow could acquire the funds that are rightfully yours.

Useful Links:

Article about the case:

IRS information on direct deposit:

Direct Deposit FAQ’s

What will happen if I enter an incorrect routing or account number?

Be very careful entering your account and routing numbers. IRS will handle account or routing number errors on split refunds the same as for regular direct deposits and mistakes can result in several different scenarios. For example, if:

  • You omit a digit in the account or routing number of an account and the number does not pass IRS’ validation check, IRS will send you a paper check for the entire refund;
  • You incorrectly enter an account or routing number and your designated financial institution rejects and returns the deposit to IRS, IRS will issue a paper check for that portion of your refund; or
  • You incorrectly enter an account or routing number that belongs to someone else and your designated financial institution accepts the deposit, you must work directly with the respective financial institution to recover your funds.

IRS assumes no responsibility for taxpayer error. Please, verify your account and routing numbers with your financial institution and double check the accuracy of the numbers you enter on your return.


One response to The Perils of (MISS)directed Deposit


    Alot of refunds by the irs with a deopist date of 1/25 have been delayed. No clue as to why. How it works is. when you use a software program and file it electronically, It will go to “their” bank account not yours,that is if you have fee’s taken out of your refund. then that bank will forward it to your bank account. The irs updates there “where is my refund” site on wed night. If you haven’t had to have any fee’s deducted from your irs refund check, It should go directly to your bank account. If on 1/23 or 1/24 your status has not updated then you probably won’t get your refund until this coming friday 2/1.


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