Your Client Got a Check From the Treasury and Has No Idea Why. What You Should Tell Them.

 

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A prospect called me recently about a check from the United States Department of the Treasury. No letter, no notice, no explanation — just his name and an amount he wasn't expecting.

If you work with buyers and sellers, some version of this call eventually comes to you first. Agents get asked the money questions because you're the one already in the conversation. Here's what's worth knowing so you can point someone in the right direction without giving tax advice.

Why an unexpected paper check matters more at a closing

Two reasons this lands differently in a real estate transaction.

First, an unexplained federal check can be the visible edge of an unresolved IRS account — and unresolved IRS accounts are where federal tax liens come from. A lien attaches to a seller's property and surfaces in title, usually at the worst possible moment in the schedule. If a client mentions a mystery check from the IRS while you're working toward a closing, that's worth a conversation now rather than during the title search.

Second, buyers get asked to document every deposit. An unexplained few thousand dollars hitting a bank account during underwriting creates a sourcing problem, and "I don't know, it just showed up" is not an answer a lender accepts. Knowing what the check is for is part of keeping the file clean.

The context that changed in 2025

Most people don't know this yet: Executive Order 14247, signed in March 2025, directed the federal government to stop issuing paper checks for most disbursements. As of September 30, 2025, the Treasury stopped mailing paper refund checks to individual taxpayers in most circumstances. Refunds and benefit payments now move electronically by default.

Paper still exists for hardship cases, people without bank accounts, and certain legal situations. But a federal paper check in 2026 is no longer routine — which is exactly why one that shows up unannounced deserves a second look before anyone endorses it.

Three questions, in order

Is it real? The Bureau of the Fiscal Service runs a verification tool at tcvs.fiscal.treasury.gov. Enter the check number and issue date and it will confirm whether the check was actually issued. Genuine Treasury checks carry a watermark reading "U.S. Treasury" visible from both sides when held up to light, which can't be reproduced on a copier. And never call the phone number printed on the check — if the check is counterfeit, so is that number.

Where did it come from? The client's IRS online account and account transcript will usually explain it. Often the notice was mailed separately and went to an old address — which, in a client who just moved, happens constantly.

Is the money theirs? If not, the IRS calls it an erroneous refund, and the rules require returning it, generally within 21 days, with interest potentially accruing in the meantime.

The usual explanations

An amended return finally processed. A math error corrected. A penalty abated. Interest paid on a refund the IRS held too long. An Employee Retention Credit (ERC) claim on the business side.

On the state level in New York: the Department of Taxation and Finance for refunds, the School Tax Relief (STAR) credit, and one-time programs like the 2025 inflation refund checks — and the Office of the State Comptroller for unclaimed funds, which returns forgotten bank balances and old uncashed checks. Sellers who owned property for decades are prime candidates for that last one.

And the explanation nobody wants: a refund generated by a return the client never filed. That's identity theft, and it's answered with Form 14039, not a deposit slip.

Two things people get wrong

Sending a copy is not returning the check. Scanning the voided check and submitting the image doesn't close it out. Until the physical check goes back, the payment is still outstanding on the government's books and interest can keep running — and the original is still sitting in a drawer, where "Void" is a deterrent rather than a lock.

Where you mark it matters. The IRS asks for "Void" in the endorsement section on the back. Writing it across the front too is fine, as long as the ink stays off the magnetic ink line at the bottom, off the check and symbol numbers in the upper right, and off the payee line and amount. Those digits are how the government identifies which check came back.

Set expectations on timing

This is the part worth passing along, because it prevents a second panicked call. The client's deadline is 21 days. The IRS's timeline is six weeks just to credit a returned check, and longer when someone has to research the account. Correspondence is worked first in, first out.

So the advice is: return it promptly, document the date, don't spend the money while waiting, and watch the transcript rather than the mailbox. Silence from the IRS is not agreement — it usually means the file hasn't been reached yet.

The reason I'm writing this for agents

A surprise check is sometimes the first visible sign of a much older tax problem. Unfiled years. A balance nobody mentioned. And older problems are the ones with the most room to be solved quietly, before they become a lien on a listing or a condition on a closing.

If a client of yours got a check they can't explain, or mentions an IRS issue they've been putting off, I'm glad to take a look before it becomes a title problem. I've spent forty years representing individuals and businesses before the IRS, and I keep the roster small enough that you get me, not a case number.

Allan J. Rolnick, CTC (Certified Tax Coach) Founder, TriState Tax Resolution — The Tax Rescue Squad LLC 718-841-7317 | allan@thetaxrescuesquad.com https://bit.ly/4kH85GJ