John Zasada, Compliance Consulting Director, Financial Institutions Group

The National Automated Clearing House Association (NACHA) issues Frequently Asked Questions (FAQs) on pandemic related questions. Several of the FAQs address Economic Impact Payments (EIPs). As the EIPs have begun to be received by financial institutions, questions arise as to how to process these payments in certain situations.

What if a financial institution received an EIP to a deceased customer’s account? According to NACHA, it believes the IRS has screened the EIPs for eligibility. Nonetheless, the financial institution can rely solely on the account number in posting the entry.

What if a financial institution receives an EIP to a closed account? NACHA indicates the financial institution should return the payment.

Are the EIPs subject to offset at the financial institution? According to NACHA, the EIPs are considered tax refunds and therefore are not exempt from a financial institution’s right to offset.  However, a financial institution should consider the ramifications of acting on the right of offset in terms of reputational damage.

If you have questions regarding these ACH deposits, contact Doeren Mayhew’s regulatory compliance specialists.