Last week, a group of angry and desperate Citi Tax Financial customers gathered outside the company’s storefront in Augusta, Georgia. Millions of Americans had received a big deposit from the IRS in their bank accounts, but they had not. The IRS website told them their coronavirus stimulus checks were deposited in an account they didn’t recognize.

With an officer from the Richmond County Sheriff’s Office beside him and another officer shouting for people to be quiet, the tax preparation company’s owner told the crowd of about 60, only a few of whom wore masks, that he didn’t have their money.

Because of the baroque machinery that runs the tax preparation industry, the IRS had sent the money to a bank Citi Tax works with but the customers had not heard of. That bank sent the payments back to the IRS.

Citi Tax’s clients — just like some clients of big tax brands such as H&R Block, Jackson Hewitt and TurboTax — didn’t get their money for the very reason Congress wanted to get money to them quickly in the first place: They are poor. The Georgia customers, almost all black women, are among the likely millions of Americans who are having trouble getting the stimulus funds they are owed. The IRS’ difficulty in swiftly getting payments to Americans has a basic, root cause: There are multiple private actors sitting between the IRS and tax filers.

“Because we have an entire industry that survives on — and is a huge force in maintaining — this system in which they are third-party intermediaries, you end up with these delays and complications,” said Chi Chi Wu, an attorney at the National Consumer Law Center.

The stimulus problems are part of a constellation of pain faced by the poor in accessing CARES Act money, from the possibility that banks could seize the money to pay off debts to advocates’ fear that, when paper checks arrive, the check-cashing industry will snatch a hefty chunk.

The tax prep business is built on a complex infrastructure designed to extract fees that many customers cannot afford. When the government tried to navigate that system to speedily get cash to its citizens, it ran into big problems.

The IRS estimates that it will send the $292 billion in CARES Act money to 171 million Americans. The first wave of payments sent out last week was targeted to less than half of those eligible: 80 million Americans whose 2018 or 2019 tax refunds had been directly deposited. To disburse most of the remaining payments, the agency is planning to mail 81 million paper checks bearing the president’s name, according to an IRS budget document.

But for a large portion of the 80 million people the IRS tried to reach last week, “direct deposit” is a bit of a misnomer. Each year, the tax refunds of more than 20 million Americans, including many of Citi Tax’s customers, take a detour. These customers don’t pay their tax preparation fees upfront, instead opting to have the fee taken out of their refund. Because regulations prohibit tax prep companies from receiving refunds directly, a special, temporary account is created at a bank that plays the middleman. The bank takes out whatever fees are owed and then passes the remainder on to the customer.

Now some of these waystation banks are sending the checks back to the IRS, saying in public statements they received them by mistake, causing significant confusion and delays. And it’s possible that some of these banks will extract fees before the stimulus money makes its way to those the government was trying to help.

Citi Tax customers aren’t the only ones facing problems. After ProPublica posted a questionnaire about stimulus payment problems last Friday evening, around 1,400 responses flooded in. People told us about madly refreshing the Get My Payment page from the IRS and calling their banks and tax preparers. Some said they needed the money for food. Some said they had been notified that payments went to accounts they didn’t recognize. Others said they’d been told they had been paid, but the money hadn’t arrived.

“My daughter and I are starving here, and we don’t have much of a shelter. I don’t know what we’re going to do if we don’t get this now,” said Aaron Buckels, a cashier in Crawfordsville, Indiana.

Like many others who wrote in, Buckels depends on his tax refund every year. He was eligible to file his taxes for free. Not knowing that, he did his taxes through TurboTax, which charged him $80, according to his receipt.

He was unable to afford that upfront. So, he paid another fee, $40 more, for TurboTax to use his refund to pay what he owed the company for preparing his return. When it came to receiving what remained of his refund, Buckels chose to have it deposited on a debit card, an option heavily promoted by TurboTax. The company pitches the Turbo Card option as a way to get refunds “fast” — but the fine print reveals that it’s only faster than a paper check. It also comes with additional charges, including a $4.95 monthly fee.

That’s where the IRS was going to send Buckels’ stimulus money, according to the agency’s Get My Payment page. But the funds haven’t arrived. Buckels was one of more than 50 TurboTax users who got both a refund transfer and a Turbo Card who told ProPublica they’d yet to receive their payments. It’s still not clear where the breakdown occurred between the IRS, the bank that handled the refund transfer and the debit card.

Despite numerous customer complaints about delays, a spokesman for TurboTax-maker Intuit, Rick Heineman, said, “These are TurboTax customers and needed stimulus payments, so our actions reflect our efforts to deliver the funds to accounts as quickly as possible with no delay and no fees.” He added that, “The IRS is ultimately responsible for determining how and when the stimulus payments will be delivered to Americans.”

Refund transfers are a cornerstone of the tax prep industry’s business model. Because low-income filers often do not have enough money on hand to pay high preparation fees, the companies need a way to effectively front them money.

A low-income, single mother with two children pays about $360 to have her taxes prepared at H&R Block, according to a company pricing chart. With a refund transfer ($40), the toll rises to $400. The equivalent cost at Jackson Hewitt, the second largest chain, would be $610, according to an estimate provided by a company employee.

Such a customer can probably expect a tax refund in the thousands of dollars because of antipoverty tax credits, which helps dull the pain of giving up several hundred dollars for tax prep help. Refund transfers are very common across the industry. For example, almost half the customers at Liberty Tax, the third-largest chain, get a refund transfer. They are most common among taxpayers with income between $10,000 and $25,000, according to IRS statistics.

Refund transfers are also often sold with other products. Those include promotional cards that come with fees of their own. H&R Block’s Emerald Card promises “easy access to your tax refund.” But it charges users $1.50 to check their balance; $3 for an ATM withdrawal; a $4.95 “inactivity” fee; and $35 to cash out the card at a bank. Last year H&R Block reported $268 million in revenue from refund transfer and prepaid debit fees.

Consumer advocates argue transfers are predatory because they are essentially loans with effective annual interest rates over 200%: $40 to $60 in finance charges just for deferring the tax prep cost by the few weeks it takes for a refund to arrive. And although the fees are generally disclosed to taxpayers, ProPublica has heard from dozens of taxpayers who didn’t understand why they were being charged or what the transfer meant.

Over the past week, the transfers emerged as a major problem for a different reason. For most taxpayers who got a refund transfer, the IRS seems to have been tripped up because it had information for two accounts, the middleman’s and the final destination, instead of one. That complication has apparently been a challenge for the IRS, which Congress has gutted with budget cuts over the past 10 years.

The IRS didn’t respond to questions.

In a statement to ProPublica, an H&R Block spokesperson pointed the finger at the government. The IRS has “created confusion by not always using clients’ final destination bank account information for stimulus payments,” the spokesperson said. “We share our clients’ frustration that many of them have not yet received these much-needed payments due to IRS decisions, and we are actively working with the IRS to get stimulus payments sent directly to client accounts.”

In a new FAQ on the IRS website, the agency confirmed that, “In some cases, your Economic Impact Payment may have been directed to the bank account associated with the refund settlement product or prepaid debit card.”

Confusing matters even more, the agency said that there was an error on its Get My Payment website, which “inaccurately indicated rejected payments were being sent back to the same taxpayer account a second time.” In fact, those payments would be mailed to tax filers, the agency said.

Among the filers affected by this additional glitch were customers of MetaBank. The publicly traded South Dakota-based firm provides refund transfers for independent tax prep storefronts like Citi Tax in Augusta. The IRS wrongly sent about 300,000 payments to MetaBank’s temporary accounts, according to one of the bank’s tax prep partners. Many customers say they are still waiting for their stimulus money. The bank said in a statement it is “deeply concerned” by the delays and referred users to the IRS.

Citi Tax is typical of the industry in many ways. Refund transfers are most common in the South and particularly in counties with large black populations. Richmond County, where Citi Tax is located, is majority black and about a third of taxpayers there with income under $25,000 get a refund transfer, according to IRS data. The transfers tend to accompany returns involving the earned income tax credit, one of the country’s largest antipoverty programs and one primarily targeted at low-income workers with children. This helps explain why the crowd outside Citi Tax was largely women.

Citi Tax is also a prime example of an industry that is largely unregulated. The store used to be part of the Instant Tax chain — once the fourth-largest tax prep chain in the U.S. until it was shut down in 2013 for what a Justice Department attorney called “an astonishing array of repeated fraudulent and deceptive conduct.”

Under the same owner, Yonathan Michael, the Instant Tax location simply changed names and continued on. Michael himself has been hit with over $90,000 in penalties by the IRS, according to liens filed against him over the last three years. But the IRS lacks the authority to prevent Michael from continuing to prepare hundreds of returns each year simply because of such violations. Michael did not respond to questions from ProPublica.

Even after more than a week of confusion, many tax filers still do not have their checks and it’s unclear precisely which part of the system’s machinery broke down. On Reddit and Facebook, frustrated tax filers looking for answers have created groups like “justice for Metabank Customers” and “H&R Block stimulus group” that have ballooned in recent days.

Some people who wrote to ProPublica have been told to expect paper checks, despite their wish to get direct deposit. Others continue to get a payment status unknown message from the IRS website. And adding to the mess, the banks that process refund transfers are handling the problems differently. Some say they’ve sent payments back to the IRS, some say they will mail taxpayers checks themselves, and still others say they will send payments electronically.

Additionally, Santa Barbara Tax Products Group, a subsidiary of the publicly traded Green Dot Corporation, suggests on its website that fees may be taken out of stimulus payments in some cases.

“In the rare event that payments are inadvertently sent to [Santa Barbara], a plan is in place to help identify and expedite the return of these payments immediately to the IRS so that the IRS can reissue payments directly to affected taxpayers as soon as possible,” the statement says. “If we are unable to identify the payment as an Economic Impact Payment, the deposit will be processed as a federal refund, with all associated fees withheld from the deposit amount.”

Santa Barbara is the largest processor of refund transfers, handling them for several tax prep brands, including TurboTax. An Intuit spokesman said its customers would not be charged fees.