• If you’re among the millions of Americans wondering “Where’s my stimulus money?” right now, a new delay has been identified in the disbursement of IRS stimulus payments.
  • That money, which Congress appropriated in the wake of the coronavirus pandemic to help ease some of the financial strain on Americans, is apparently being routed first to bank accounts associated with tax preparation services, which use temporary bank accounts sometimes to get customers their refund anticipation loans.
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When I predicted at the outset of the Trump Administration’s stimulus check rollout that some Americans might not receive their checks until May at the earliest — despite insistence from US Treasury Secretary Steve Mnuchin that the checks would go out in a matter of days — I got some pushback in comments saying the government was promising otherwise. With the end of April now at hand, it looks like that prediction was true, but for at least one reason no one could have foreseen:

Turns out, millions of payments have been held up, detoured into the wrong bank account, and otherwise delayed for the unfortunate reason that the checks’ intended recipients have low incomes.

That’s according to a new report from ProPublica, to which your first might be — but wait, wasn’t the whole point of the stimulus money in the first place to quickly get money into the hands of the people who needed it most? Well, yes, of course. But here’s what happened, and a gathering of angry customers last week outside a Citi Tax Financial storefront in Augusta, Georgia, helps explain things.

The crowd of about 60 people was demanding to know where their checks were after the IRS website told them their coronavirus stimulus money had been deposited into strange bank accounts. Sheriff’s officers had to be called to maintain order while the owner of the tax preparation company told the crowd he didn’t have their money. Because of the way tax preparation services work (and generate refund anticipation loans, more on that in a moment), the IRS had actually sent out the stimulus money in question to Citi Tax’s bank — not the customers’ banks (Citi Tax’s financial institution, of course, sent the money back to the IRS, since it wasn’t theirs, which only delayed things even more).

As we noted here, When taxpayers use a tax preparation service like H&R Block or Jackson Hewitt, they sometimes opt to get their IRS refund faster by essentially getting a loan advance from those companies against that refund. That loan is often provided through a debit card linked to a temporary bank account — a bank account that isn’t theirs but is seemingly being identified somehow by the IRS as the place to send the stimulus money.

This delay is yet another reason to be aware of the cost associated with these refund anticipation loans, which can also hit a customer with fees of up to $45 on top of a tax preparation fee of a few hundred dollars.

According to an update from the IRS a few days ago, the agency had issued 88.1 million stimulus checks to taxpayers as of April 24, with the average check amount totaling $1,791. The data also reflects that the IRS has paid out more than $157 billion so far as a direct disbursement to Americans, which generally comes in the form of up to $1,200 to individuals and $2,400 to married couples.

The first wave of stimulus payments that got sent out went to the roughly 80 million Americans whose 2018 or 2019 tax refunds had been directly deposited, which gave the IRS information allowing it to quickly send out the payments to those bank accounts electronically. For the rest of the payments, the IRS will send out waves of paper checks that bear President Trump’s name, according to the agency.

Andy is a reporter in Memphis who also contributes to outlets like Fast Company and The Guardian. When he’s not writing about technology, he can be found hunched protectively over his burgeoning collection of vinyl, as well as nursing his Whovianism and bingeing on a variety of TV shows you probably don’t like.