Are there special endorsement requirements for US Government checks to two parties?

Question

At a bank where I have a checking account in my name only, I regularly cash a dividend check made out to my wife AND me. My wife endorses the check at home and then I stroll down to the bank and add my endorsement. I submit the check and the bank gives me the cash.

Last year I attempted the same procedure with our Federal tax refund check, also made out to my wife AND me. The bank refused to cash the check and would not deposit the check, citing some rule that the US Government requires her to be present to endorse the check. My response beyond, expletive deleted, was to point out that feds would not know whether she was present when the endorsement was made and that this makes no sense.

As it turns out I have another sole account at a different bank down the street from the first. I took the check to it and successfully deposited the check to my account.

Was the first bank following statutory procedures or were they making up rules on the fly? Was the second bank somehow remiss in depositing the check?

Answer 1

U.S. Treasury checks are treated differently than other checks. They are governed by 31 CFR Part 240. This regulation outlines the requirements for endorsing and presenting the check for payment, and the requirements are more strict than other checks. In addition, the regulations give the government extra ability to refuse payment of the check if it is not endorsed properly that other check writers do not have. As a result, banks are overcautious with treasury checks.

My credit union is normally very lenient when depositing checks into my wife’s and my joint account. My wife or I can deposit checks made out to either of us, and as long as we are depositing the entire amount into our account (not cashing it), the checks don't even need to be endorsed.

However, when it comes to government checks (i.e. tax refund check), they insist that the check be signed by both my wife and I, even though we are simply depositing it into a joint account.

Even with this policy, my credit union does not insist that we both be present at the teller window, just that we each sign the check. Of course, as you and mhoran_psprep have pointed out, it would be ridiculous for them to insist we both be there, because we could deposit it by night deposit, by mail, or by any other after-hours method.

To answer your question, nowhere in the regulations that I could find does it insist that both parties be present to deposit the check. However, the regulations do insist that the financial institution ensure that the check is not endorsed without each "payee's consent or authorization."

Perhaps your bank has been burned in the past by treasury checks getting returned. When a bank is setting policy, they really can't expect their tellers to be familiar with all the details of every regulation. They have to set policy that covers themselves legally and are easy to be followed by their employees.

The fact that it was not going into a joint account might have something to do with it. But I agree with you that the policy does not make a whole lot of sense, and I don't think that the second bank was remiss.

Answer 2

When faced several times by a teller trying to require that both parties be present I simply resorted to scanning checks and submitting the check via their remote deposit system. They only cared about the two signatures, not the presence of the two people in front of them.

Many years ago when we were first married we moved. The bank wouldn't accept me handing in the change of address card for my wife's account. They wanted to see her in person. When I explained that it would be difficult for her to get there during their banking hours they said "If she comes after business hours she can drop the form in the night box and it will be processed the next day" I let that sink in for a few seconds before they realized how silly that sounded, and took the form from me.

Answer 3

I've run into a variation on this--I was trying to deposit a tax refund check without having her endorsement on it. I've deposited plenty of other checks made out to her and without an endorsement. They confirm her name is on the account and it goes through. The teller told me there were special rules for refund checks, she couldn't do it because there wasn't a 100% match between the account registration and the names on the check. (The account is in the name of a trust, both of our names are on the trust. This was fine for anything but a tax check.)

There are enough reports of different rules for tax checks that I'm sure there are different rules. Whether every teller has implemented them with 100% accuracy is another matter....

Answer 4

I knew offhand that "treasury checks" are a different animal from what every one else uses, but no specifics. A litte google-fu and http://www.bankersonline.com/articles/bhv16n5/bhv16n5a8.html

"U.S. Treasury checks are governed by their own set of rules, found at 31 CFR Part 240. Those rules govern the length of time Treasury has to examine checks, as well as the length of time within which it can pursue a claim for bad endorsement.

Suffice it to say that the rules are written in a manner that is extremely favorable to the Treasury ...."

Answer 5

Generally banks want to make sure that everyone the check is made payable to are going to have legal access to the check. Because the check was made payable to both and only one was on the account, the wife does not have legal access to funds she is entitled to. Additionally the Treasury has several years (7 perhaps?) to return the check if they believe it to improperly endorsed in which case you would suddenly and unexpectedly see a debit on your account if they decided not to honor the check the bank had allowed you to deposit.

Answer 6

I agree that the bank should require both husband and wife be present to deposit tax return checks.

Some couples actively use joint accounts and some couples don't. If either the wife or husband controls the joint account, only one party can benefit from that.

It actually happened to me. We had one joint account over 8 years which only my husband was using actively. I never deposited to the account since I didn't even have an ATM card. One day I found out that my husband had been depositing all my tax return checks in that. The tax return was not joint but single. He deposited and just used the money for himself without my consent. The bank should have had a rule to make the person named on the check to be present when depositing all IRS checks whether joint or single.