Archive for category: News

,

Treasury Cancels Outstanding EIP Checks

Treasury Department announced that as of July 6, 2020 it has cancelled outstanding Economic Impact Payment (EIP) checks issued to recipients who may not be eligible for such program payments, including those that may be deceased. 

In its release, Treasury encouraged banks to determine the status of EIP checks by using either:   

  • The Treasury Check Verification Application (TCVA) for single queries; or 
  • The Treasury Check Verification Service (TCVS) for bulk queries using an automated programming interface (API). 

For a cancelled EIP check in TCVA (single query), the response will be “The U.S. Treasury Check has already been paid.” For a cancelled EIP check in TCVS (bulk queries), the response will be “U.S. Treasury Check has been cancelled.” 

If a bank inadvertently negotiates a cancelled EIP check, Treasury will not request or demand recovery from the bank, unless there is an additional reason to do so, for example the check was not properly endorsed. Similarly, Treasury will not reclaim from banks ACH payments made to recipients who may not be eligible for such payments under program specifications. 

EIP recipients are responsible for returning to Treasury a payment made to someone who may not be eligible for such payment under program specifications in accordance with guidance at www.irs.gov/coronavirus. 

Customers should use the following address for the return of EIP checks to the Treasury: 

U.S. Department of the Treasury 
Bureau of the Fiscal Service 
Philadelphia Financial Center 
P.O. Box 51320 
Philadelphia, PA 19115 

Treasury also requests customers include correspondence explaining the reason for return.  

Treasury has also posted frequently asked questions (FAQs) for banks and other useful links about EIPs at https://www.fiscal.treasury.gov/news/useful-covid-19-links.html. Treasury will continue to update the FAQs as needed when there is new information to provide. 

By, Ally Bates

/by
,

Update on Consumer Fraud, Including Imposter Scams and Money Mule Schemes

Consumer fraud has been on the rise amid the COVID-19 pandemic. WBA has become increasingly aware of unemployment, EIDL, and PPP fraud. On July 7, 2020, the Financial Crimes Enforcement Network (FinCEN) issued an advisory to alert financial institutions to potential indicators of imposter scams and money mule schemes. 

The advisory contains descriptions of imposter scams and money mule schemes, financial red flag indicators, and information on reporting suspicious activity. Generally, fraudsters are targeting customers, and financial institutions are advised to remain alert for potential suspicious activities. For example, a customer may be in contact with criminals impersonating organizations such as the Internal Revenue Services (IRS), the Center for Disease Control and Prevention (CDC), the World Health Organization (WHO), and other healthcare or non-profit groups, looking to offer fraudulent services to victims. 

In addition to imposter scams, FinCEN outlines money mule schemes whereby a person, either knowingly or unknowingly, transfers money that has been acquired illegally, on behalf of another. An individual may either be motivated by ignorance, a romance scam, or be complicit, with expectations of profit. For example, a financial institution may notice transactions that do not fit a customer’s history, suspicious new accounts, or otherwise atypical transactions. 

In particular, there have been schemes detected related to unemployment fraud. Financial institutions may notice a customer who receives multiple state unemployment insurance payments. The United States Secret Service has identified a crime ring behind a large volume of fraudulent unemployment claims being filed with State departments across the country. As discussed above, participants may be complicit, or unknowing of their involvement, financial institutions should remain vigilant to identify potential fraud. 

Similar to unemployment fraud, financial institutions have begun identifying fraud related to EIDL and PPP loans. Given the potential avenues for fraud, financial institutions should become familiar with the known schemes, and resources available. For additional information consider the following resources: 
 
FinCEN advisory. 

Fraud related to SBA loan programs. 

By, Ally Bates

/by

IRS Shares COVID-19 Red Flags for Bank SARs

The IRS assembled a list of red flags regarding COVID-19 related programs like the Economic Impact Payments (EIP) and the CARES Act. The current list is available below.

Economic Impact Payments (EIP) based questionable/fraudulent or red flag activities:

Multiple direct deposits of EIP into the same account, particularly when the amounts of the checks are the same or approximately the same (e.g., $1,200 or $2,400)

Deposits of multiple paper checks into the same bank account, particularly when the amounts of the checks are the same or approximately the same (e.g., $1,200 or $2,400)

Cashing of multiple emergency assistance checks by the same individual

Deposits of one or more emergency assistance checks, when the accountholder is a business and the payee/endorser is an individual other than the accountholder

Opening of a new account with an emergency assistance check, where the name of the potential accountholder is different from that of the depositor of the check

Individual accounts opened within the last 60 days receiving multiple US Treasury checks or direct deposits from the US Treasury

Rapid transfers of funds that consolidate deposits -or- large subsequent counter withdrawals in cash -or- serial ATM withdrawals for the maximum allowable amount -or- large amounts of funds withdrawn in the form of cash back at retail establishments using prepaid debit cards from individual accounts receiving COVID-19 assistance

Other tax relief under the CARES Act questionable/fraudulent or red flag activities:

Opening of a new business account to receive a direct deposit of assistance funds or apply for a loan

The business does not appear to have a lengthy history (e.g., established within the last few months), a physical presence or address, or an Employer Identification Number

The business displays some discrepancies with the address, or it is located in a high-risk jurisdiction or an area that is not usually associated with the merchandise they are selling

The business has an unclear business model and it is difficult to determine the true nature of the company and its operations.

The business is receiving payroll protection relief without history of payroll activity

The business receives a payment/credit from Treasury in addition to a loan from SBA – businesses can be eligible for only one

Deposit to the business is solely from CARES act assistance

Additional red flags to look out for:

Customers could be victims of account takeover after their identity is stolen

Customer provides a document that appears to be a check from the U.S. Treasury, often in an amount less than the expected EIP, with instructions to contact the fraudulent government agency, via a phone number or online, to verify personal information in order to receive the entire benefit

The customer’s personal bank account starts to receive transactions that do not fit his or her history of typical transactions, including overseas transactions, When asked about the changes in transactions, the customer declines requests for “know your customer” documents or inquiries regarding sources of funds, and may mention COVID-19, relief work, or a “work-from-home” opportunity

The customer purchases large amounts of convertible virtual currency (CVC) or engages in fiat currency transactions

The customer opens accounts in his or her name at multiple banks so he or she may receive money from various individuals/businesses and then move the money to other accounts, as specified by the customer’s fraudulent “employer”

By, Eric Skrum

/by

WBA Press Release: Can I Wear a Mask Into My Bank?

Bank branches reopening, may request customers lower masks briefly for identification

MADISON – The health and safety of customers and employees remains a top concern for Wisconsin banks as the state carefully begins reopening. As essential businesses, Wisconsin’s banks remained open throughout the Safer-At-Home order, serving their customers in the drive-through, over the phone, and via online and mobile banking.

In a recent Wisconsin Bankers Association member survey, the majority of respondents indicate they will either require or encourage employees to wear masks (59% total). Additionally, in order to help their customers feel safe and comply with CDC and State health recommendations, some banks may allow (or even require) branch visitors to wear masks.

However, safety and security collide when it comes to customers wearing masks, as banks are historically and understandably uncomfortable with people disguising their faces while in the bank. Out of an abundance of caution and to protect staff and customers, banks have historically prohibited masks and other face coverings. With many customers anxious about health concerns, many banks are shifting those rules to be more flexible.

“Banks’ highest priority is the health and safety of their customers and their staff,” said Rose Oswald Poels, president/CEO of the WBA. “Each bank will weigh its unique risks and determine their procedures for permitting customers to wear masks while in the branch. Customers should remember that banking services remain available online and through mobile applications as well as drive-throughs.”

Bank customers should consider what their bank’s guidelines may be related to masks. WBA’s member banks are employing a variety of strategies, so customers may be asked to:

  1. Lower their mask for a few seconds while facing a security camera
  2. Lower their mask for a few seconds to allow staff to identify them
  3. Answer security/identification verification questions (similar to using phone banking services)
  4. Use the drive-through if they are unwilling or unable to comply with the bank’s guidelines for masks

WBA encourages consumers to contact their bank directly with specific questions about wearing masks and/or other face coverings in the branch.

By, Amber Seitz

/by
, ,

IRS Issues Instructions on How to Handle Payments Made to Deceased Individuals

On May 6, 2020 the Internal Revenue Service (IRS) updated its Economic Impact Payment Information Center to include new questions and answers related to Economic Impact Payments (EIP) issued to deceased individuals. 

IRS Question 10 asks whether someone who has died qualifies for an EIP. The answer states the following: 

“No. A Payment made to someone who died before receipt of the Payment should be returned to the IRS by following the instructions in the Q&A about repayments. Return the entire Payment unless the Payment was made to joint filers and one spouse had not died before receipt of the Payment, in which case, you only need to return the portion of the Payment made on account of the decedent. This amount will be $1,200 unless adjusted gross income exceeded $150,000.” 

The instructions for returning an EIP provide the following: 

  • If the payment was a paper check: 
  1. Write "Void" in the endorsement section on the back of the check. 
  2. Mail the voided Treasury check immediately to the appropriate IRS location. 
  3. Don't staple, bend, or paper clip the check. 
  4. Include a note stating the reason for returning the check. 
  • If the payment was a paper check and you have cashed it, or if the payment was a direct deposit: 
  1. Submit a personal check, money order, etc., immediately to the appropriate IRS location. 
  2. Write on the check/money order made payable to “U.S. Treasury” and write 2020EIP, and the taxpayer identification number (social security number, or individual taxpayer identification number) of the recipient of the check. 
  3. Include a brief explanation of the reason for returning the EIP. 

The IRS has provided a list of appropriate addresses on its website which can be found in the link at the end of this article. 

Considerations for Banks 

The information provided by IRS answers the question as to how EIPs made to decedent should be handled, making it clear that they are to be returned. This is true for EIPs made both by check and direct deposit. An individual who receives an EIP payable to a decedent, or who is in possession of EIP funds paid to a decedent, must return those funds. 

Unfortunately, because this information was not issued until after many payments had already been made, it means that some banks have likely already accepted payments made to a decedent. While the information provided by the IRS instructs the recipient to return the EIP funds, banks should consider how they use this information. Certainly, if a customer receives a direct deposit on behalf of a decedent, or presents a check payable to a decedent, that customer should be directed to the instructions for returning the payment. For customers who have already received the funds, either by direct deposit or by depositing a check, those funds still need to be returned pursuant to the instructions. 

The IRS instructions also provide how the recipient is to determine the amount that must be returned. Banks are reminded that the appropriate amount that is to be returned is a consideration that should be made by the customer, not the bank. The instructions relate to the recipient and furthermore, banks are not in a position to know the customers adjusted gross income to make the determination on a customer’s behalf. 

Conclusion 

IRS has made it clear that decedents are not eligible for EIP funds, and individuals who have received payments made to decedents are to return those funds. At this time, IRS has not indicated any steps beyond the requirements above. For example, there is no current indication of a reclamation process beyond a requirement for recipients to return the payments themselves. 

Click here for the IRS FAQ.

By, Amber Seitz

/by

Tax Implications for PPP Borrowers

Late last week, the IRS issued Notice 2020-32 related to the deductibility for Federal income tax purposes of certain otherwise deductible expenses incurred in a taxpayer’s trade or business when the taxpayer receives a covered loan pursuant to the Paycheck Protection Program under section 7(a)(36) of the Small Business Act (15 U.S.C. 636(a)(36)). This Notice can be found here.

Specifically, this Notice clarifies that no deduction is allowed under the Internal Revenue Code for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a covered loan pursuant to section 1106(b) of the CARES Act, and the income associated with the forgiveness is excluded from gross income for the purposes of the Code pursuant to section 1106(i) of the CARES Act. The IRS said that to the extent the income resulting from loan forgiveness under the PPP is excluded from income, it’s considered a “class of exempt income” under regulations promulgated under section 265. The IRS believes this treatment of not allowing the deduction of these covered expenses is appropriate because it prevents a double tax benefit.

It is possible this IRS guidance will be reversed by Congress as the heads of congressional tax committees want expenses funded with small business loans to be deductible. Given this evolving situation, bankers are reminded to be careful about providing tax information regarding any aspect of the PPP loans, and encourage borrowers to consult with their tax advisor regarding any tax implications of a PPP loan.

By, Ally Bates

/by
,

WBA PPP Loan Forgiveness Guide

Last updated on June 24, 2020

By, Eric Skrum

/by

Why Your Money is Safe in the Bank

By, Eric Skrum

/by

Differences Between PPP and EIDL

Last updated 04/02/2020 at 4:00 PM.

By, Eric Skrum

/by

Wisconsin SBA Lenders

Below is a list from the Small Business Administration of Wisconsin's financial institutions that offer SBA Loans, including contact information/website links. This list DOES NOT include any financial institutions that have applied to become an SBA Lender for the purpose of the Paycheck Protection Program (PPP). (For a full list of all lenders that are participating in PPP and are licensed to do business in the state of Wisconsin, please click here.)

WBA encourages businesses to contact their lender to determine participation in the Paycheck Protection Program (PPP). Please note that PPP is different than the PFP column in the list below (last updated on April 1, 2020 at 1:00 p.m.).

The PDF below, compiled by SBA, lists all lenders (alphabetically) that are participating in the Paycheck Protection Program (PPP) and are licensed to do business in Wisconsin. Therefore, this list includes non-depository institutions and out-of-state or online lenders. WBA strongly recommends businesses work with local institutions that have a physical branch presence in the state. 

In addition, SBA has built a search tool to help businesses find SBA lenders. Access this tool here

By, Eric Skrum

/by
WBA logo

questions@wisbank.com

608-441-1200

4721 S Biltmore Ln.
Madison, WI 53718

Get our Newsletter!
Subscribe