The Journal of Accountancy's unnecessarily dramatic headline — Limit on direct deposit of refunds will go into effect in 2015 — doesn't quite capture what's really going on here. What's really going on here is that the IRS wants to limit those who have lots of refunds put in their account. Presumably, a taxpayer should really only have one refund for one bank account, but the limit is going to be 3 anyway:
In its latest attempt to fight tax refund fraud, the IRS said that, beginning in January 2015, it will impose a limit of three electronic direct deposits of tax refunds into a single financial account or prepaid debit card. Taxpayers who exceed the limit will receive the fourth and subsequent refunds in a paper check instead of a direct deposit.
Taxpayers who request more than three direct deposits to one account will receive a notice of the change, be told they can expect a refund check in about four weeks, and be able to track the status of the refund on the IRS’s “Where’s My Refund?” site.
The new limit is intended to prevent criminals from easily obtaining multiple refunds. It is also intended to stop tax return preparers from obtaining payment for their tax return preparation services by depositing all or part of a taxpayer’s refund into the preparer’s own bank account.
We read no less than 1 story a week about some podunk tax preparer who ran a refund scam, <sarcasm>no word on whether voluntary tax preparer registration could cut down on this</sarcasm> but I guess this will do for the interim.
