The IRS has announced Advance Child Tax Credit (ACTC) payments will be sent via Direct Deposit with an effective date of July 15, 2021. Recurring monthly payments will continue through the end of 2021. In addition to July 15, Direct Deposits are expected to have effective dates of August 13, September 15, October 15, November 15 and December 15.

Unlike previous economic impact payments and regular tax refunds, Nacha expects the IRS to use a 1-day settlement period for ACTC payments. This is a significant improvement to the disbursement process as it will lessen uncertainty and confusion as to when taxpayers will have access to funds. For your planning purposes, anticipate receiving files on the day prior to settlement. For files received prior to 5:00 PM (local time) on the day before settlement, funds must be available to consumers by 9:00 AM (local time) on the settlement date.

The Direct Deposits will use the Company Name “IRS TREAS 310” and the Company Entry Description “ CHILDCTC”. Note the two spaces at the beginning of the description. The description will not include the garnishment exemption coding of “XX” because the payments are not exempt from garnishment. However, please be aware some states may impose different restrictions in relation to garnishment.

The IRS has said that more than 36 million American families could be eligible for the ACTC payments. At recent Direct Deposit payment rates, an estimated 30 million Direct Deposits could be sent for each of the monthly payment dates. The IRS will also send check payments, but reloadable cards will not be used.

Please keep the following in mind as you handle the upcoming ACH payments:

• EIPs sent to closed accounts should be returned according to The U.S. Treasury’s Green Book (page 4-2), using the appropriate return code as listed in chapter four.
• RDFIs can rely on the account number when posting EIP payments, regardless of whether the name of the Receiver matches the name associated with the account number in the Entry, as stated in ACH Rules Subsection 3.1.2.
• EIPs are not subject to Reclamation.
  

Additionally, here’s a few tips for handling the check versions of these payments:

• If a Treasury Check is made payable to two parties with "and" between their names, both parties must endorse the item. If one party is deceased, we do not recommend accepting the check. If the check does not have "and" between the names, either person can endorse, and the money can be put into the account of the surviving person.
• According to Uniform Commercial Code (UCC), you "may" accept post-dated checks, however; this may be against your institution's policy. It is up to your financial institution as to how you want to handle this, but just make sure you are handling them all the same. For example, if you accept the checks before Friday for one person, you need to do so for everyone.
• Fiscal Service encourages financial institutions and check cashers to verify the security features of a U.S. Treasury check, and to determine the status of EIP checks by using the Treasury Check Verification System (TCVS) for bulk queries using an automated programming interface (API).
  

Nacha also is aware the IRS is developing a new tool, similar to the previous portal Get My Payment. It will be called the ACTC Update tool, and consumers will be able to provide current banking information.

We will keep you updated if more information is released. Please stay tuned to News You Can Use and the Knowledge Community in the coming weeks.

Source: Nacha