Dealing with IRS Refunds and Bank Problems

When most people think of any dealings with the IRS and taxes in general, one may shudder. This is especially true if one owes money, and maybe a considerable amount as they may not have opted for automatic deductions from their paycheck. Also, if one doesn't request an extension for filing taxes promptly on April 15th of each year, one can be looking at severe penalties. Then, if one owes a considerable amount to the IRS, one might have to hire a tax lawyer to make arrangements for payments, otherwise again face penalties. In other words, it seems one can face penalties on several issues here.

But what happens if the reverse is true, and the IRS owes you money, but red-tape is involved in receiving it? That is exactly what happened to me, and this article will tell you not only the frustrations involved in getting a rightly deserved refunds, but how I got through it, had the problem solved, and I might add, without hiring a lawyer.

While my mother died last year, on August 26, 2006, I nonetheless had to file her taxes, both her Federal and State tax forms, being that I was her daughter and only living survivor, thus her "personal representative". On each tax return form, I clearly marked on top of them that my mother was deceased and gave the date of her death. I also clearly marked that I was her daughter and personal representative. Well, it seems both the state and federal offices neglected to see this, and a few months later, the refund checks started coming in. There was one major problem, however, as the checks were made out in my mother's name. So I had to call both the state and federal offices and explain the situation, that these refund checks should have been made out in my name, not my mother's. My mother, for the last five years of her life did not have a checking account, and there certainly was no separate account labeled the "Estate of..." with my mother's name either.

For the state refund checks, I was told I would have to fill out a Survivor's Affidavit, have it notarized, and send the checks back, and they could reissue the checks solely and only with my name, with the addition of "personal representative" next to my name. For the federal refund check, I had to fill out the 1310 Form and send that, plus the federal check back to them and again, the check would be reissued in my name only. This I did, and about a month later, I received all three refunds checks, solely and only in my name. So no problems here.

The problem however, was connected with the Earned Income Tax Credit Refund for the years 2003 and 2004. I had received a letter, dated in January addressed to my mother, indicating that she was eligible for EITC refunds. Being that I was her sole survivor, I was therefore eligible for these refunds as well. My mother had claimed me as a dependent who was not only disabled, but living with her, thus having all the qualifications that is acceptable for claiming me such a refund.

So, not long after receiving this letter about the refunds available, I filled out all the forms necessary and mailed them off. Months passed by without hearing anything, then I received even more forms to fill out for further verification of my qualifications to claim the refunds. So once again, filled out more forms and sent those out. It wasn't until June that I received the US Treasury refund check for the tax year 2004 (I'm still in the process of claiming the 2003 refund). There was a problem though. Oh, yes, it most certainly did have my name on the first line of "Pay To" but also had the addition of "Estate Of...(my mother's name). Now here is where the red-tape and frustrating hassles came into play. I went to my bank, of which I have been a customer for over twenty years. When I showed the check to one of the people of customer service, I was told I couldn't deposit it. Since the check had the addition of my mother's name on it I was told that I would have to get Letters Of Administration from Surrogate's Court, come back and then open up a separate account with my name, along with the "Estate of.." my mother's name.

Now for most people, maybe this wouldn't have been a problem, but due to my disability I can't travel and the Court was quite a distance away, plus one doesn't simply file for such documentation for free. I did at one time, around last November, go to Surrogate's Court on another matter related to my mother, however, I was only able to do so by going by cab, at a cost of $40.00 round trip. When I went there at that time, it was to get a Small Estate Affidavit filled out. Don't ask all the documentation I came with...it would have made a lawyer proud. Apparently, however, it wasn't enough. I was told I needed my mother's original will, which she had made up by a lawyer back in 1985, not the copy I had. I was told I also needed a Third Party Affidavit For Sole Distribute Child filled out by someone who had known my mother a minimum of twenty years, could verify that she outlived my father, that she never remarried, and that I was indeed the only living child. To say I was a bit annoyed is an understatement, and was a $40.00 trip for nothing. Talk about aggravation, and I admit, I gave up on it.

To my mind, I would have gone through the same hassle trying to get those Letters Of Administration as well. Of course, as months passed, I did manage to track and find the new law firm that now was in possession of my mother's original will and it was sent to me, and I also found someone who could fill out that Affidavit. The main problem was that I just didn't have the extra money to make the trip out by cab again being that I am receiving a small monthly SSI Disability benefit check. So here I was, with this nice large refund check but not being able to do a thing with it. So back to phone calling the IRS. Once again I was told that I would have to fill out the 1310 form, and send the check back so it could be reissued to me in my name. This I did. Then I got a letter back to me in August, telling me that they were indeed going to reissue the check to me, but it would still be the same way, that is with both my name and my mother's. It seems due to some kind of rules and regulations, they couldn't issue a check only in my name--why I don't know, as I hadn't had problems with those other refund checks being issued solely and only in my name. A few days later, I got the check and yes, it indeed was made out to both names. I was back at square one again, and by this time frustrated beyond belief.

Now I was getting advice from my friends that I should think in terms of hiring legal help with this issue, but I had to think there just had to be a better way than this route. So instead of hunting up a tax lawyer, I called up the same representative from my Congressman's office who had helped me when I was having problems with my disability benefits, to put it mildly, as my benefits had suddenly been cut off entirely. The woman only dealt with disability issues, but I was hoping she might have leads on someone who could help me. She did. She referred me to a Tax Advocate agency and to one person in particular.

So here I was doing more phone calls, and got hooked up with the woman who would be my caseworker involved in handling my issue here. She admitted though she was at a loss as to why I was having so many problems, not so much with the IRS, but with my bank for refusing to recognize that this was a legitimate check that I could deposit in my account despite the double names on the check. She then suggested the idea that she would send a letter to me that I could hand over to my bank verifying the fact, that I could indeed deposit the check into my account without a problem and without needing any Letters Of Administration. In the meantime, she suggested, while waiting for her letter, which was to arrive about a week later, that I go back to my bank, explain the situation and if need be, my bank could call her to verify this information. I did, without any success...again. They told me the same thing, about needing those Letters of Administration.

Finally, the moment I got the Tax Advocate caseworker's letter, I went to my bank again. I showed the letter to the bank manager, and at first it was a no-go about it. I was being told the same exact thing as I had heard several times already. Inwardly, I would have like to have created a "scene" by now...I'm a patient person but I was really beginning to lose it. I stood firm about it, and calmly repeated what was in the letter, that no, I did not need Letters Of Administration, nor did I have to open up a separate account, and that even though both names were on the check, as long as the first line name was mine, the check could be deposited. The bank manager then called their legal department, and the person on the other end told her to fax over the Tax Advocate's letter plus the check. Putting the woman on hold, the bank manager faxed everything, and I waited. When the manager came back she resumed her conversation with the other person from their legal department. I nearly fainted when I was told it was all right to deposit the check. Believe me if I could have I would have done a few loud yippees, and praises of Hallelujahs and danced in the middle of the bank without being carted away I would have.

The whole point of this article is to give someone out there tips if ever one goes through the same aggravating and frustrating ordeal I had. If you do, as I learned, you don't have to race out and hire a costly lawyer, but have the situation handled by a Tax Advocate who will become your caseworker and will do this service for free. Hopefully with this knowledge, one can accomplish in getting results done a lot sooner than I did.