From the IRS
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.
In 2012, the Treasury Inspector General for Tax Administration recommended that the IRS limit the number of refunds that can be deposited in the same account and presented evidence that some accounts were receiving large numbers of deposits that the IRS had not detected (TIGTA Rep't No. 2012-42-080). The IRS at that time expressed a concern about the effect a direct-deposit limit would have on taxpayers with legitimate multiple-person accounts but agreed to work with Treasury's Financial Management Service (now the Bureau of the Fiscal Service) to determine whether limits were feasible.
In announcing the change, the IRS pointed out that direct deposits must be made to accounts bearing the taxpayer's name and that tax preparers are not permitted to obtain payment of their fees by submitting a joint Form 8888, Allocation of Refund (Including Savings Bond Purchases) , to split the refund with taxpayers and are also prohibited from opening joint bank accounts with taxpayers. Preparers who do so are subject to IRS sanctions.
The IRS believes most taxpayers will not be affected by the new rule, but acknowledges that a few will, such as those who may have a single family bank account into which all of the family members' refunds are deposited. These taxpayers will have to make other arrangements or expect to receive paper checks.