Bank error in your favor - Collect $200

[justadope]

What is the name of your state? Arizona

We've probably all played Monopoly and seen this Community Chest card drawn, how does it work in the real world?

Let's say, for example, that I ask a bank to open a savings account for $100 and debit my checking account for the amount and they instead debit my checking account $1.

Am I obligated to notify them? Is the error considered irreversable after some period of time? If so, am I required to report the difference as taxable income or may I consider it a gift? If taxable income, in what tax year should it be reported?

Thanks in advance

 

[Zigner]

What is the name of your state? Arizona

We've probably all played Monopoly and seen this Community Chest card drawn, how does it work in the real world?

Let's say, for example, that I ask a bank to open a savings account for $100 and debit my checking account for the amount and they instead debit my checking account $1.

Am I obligated to notify them? Is the error considered irreversable after some period of time? If so, am I required to report the difference as taxable income or may I consider it a gift? If taxable income, in what tax year should it be reported?

Thanks in advance

Dope - they *will* find the error and reverse the charges. Also, you are obligated to, at the very least, NOT use the money that is in your account in error.

 

[justadope]

Dope - they *will* find the error and reverse the charges. Also, you are obligated to, at the very least, NOT use the money that is in your account in error.

I really wasn't looking for any estimates on the probability that the error would be corrected.

The checking account and savings account are at two different banks. Are you suggesting I'm not entitled to use the funds in my savings account even though it is properly mine? Or are you just suggesting that I reserve the appropriate funds in my checking account in case the bank debits it for the balance at some point? I think that is reasonable, though my original questions stand, at what point do I no longer need to do so as the bank has no legal right to debit my checking account for the balance?

Thanks again.

 

[wdlugitch]

What objection to you have to notifying the bank of its error? You know you are not legally entitled to that money, don't you? It's called "theft," if you use it.

 

[justadope]

What objection to you have to notifying the bank of its error? You know you are not legally entitled to that money, don't you? It's called "theft," if you use it.

Which money am I not entitled to use? The money in my savings account is exactly the amount of money that is supposed to be there. I'm pretty sure I'm entitled to use it.

And it would be hard to call using my money in my checking account "theft". I'm pretty sure I can spend it without being called a thief, I do have a line of credit linked to the account so if the bank ever does process the debit it would clear. So spare me the talk about being a thief, that isn't what we call it when the bank makes an error in it's favor.

Now back to my legal questions, at what point does the bank no longer have a legal claim against me for the difference between what they should have debited my account for and what they actually debited my account for and what are the tax consequences?

For the moralists, you can start a separate thread discussing how much effort you think someone should take to return a penny, a dollar, $100, $1000 and $10,000. I won't be participating.

 

[Zigner]

Which money am I not entitled to use? The money in my savings account is exactly the amount of money that is supposed to be there. I'm pretty sure I'm entitled to use it.

The savings account bank WILL debit your checking account bank for the balance. If the money is not available in the checking account bank, then you will incur overdraft fees at BOTH institutions AND you will have a negative balance in the savings account bank.

It IS called theft if you don't return the money that you use that you are not entitled to it. Of course, you could work something out with the bank to clear it up - BUT WAIT! You don't want to tell the bank!!!

Your handle is appropriate.

 

[justadope]

The savings account bank WILL debit your checking account bank for the balance. If the money is not available in the checking account bank, then you will incur overdraft fees at BOTH institutions AND you will have a negative balance in the savings account bank.

It IS called theft if you don't return the money that you use that you are not entitled to it. Of course, you could work something out with the bank to clear it up - BUT WAIT! You don't want to tell the bank!!!

Your handle is appropriate.

Again, I'm not looking for someone to comment on the probability that the bank with correct it's error and if you had read the thread it would be clear that there is no risk of an overdraft occurring. The bank is welcome to debit my checking account at any time as long as they have a legal right to do so.

You use the word "theft" without identifying this money you suppose I am not entitled to and have thereby stolen. Which money would that be? The money in the savings account is mine and so is the money in my checking account. Maybe the gas in my gas tank isn't really mine until the credit card charge clears my bank? There is no theft here, there is no stolen money. There is a mistake made by the bank in that they haven't properly debited my account. They haven't credited my account with more money than should be in it (the taking of which might be considered theft), they just haven't made an effort to collect what they are due.

My legal question, which Zigner is studiously avoiding, is at what point does the bank lose it's legal right to correct it's mistake and what are the tax consequences (ie would the mistake be considered taxable income to me).

The answer may have been provided by another poster in another thread where he said that the statutue of limitations for a mistake is three years in Arizona. I'm not sure if that applies to an interstate bank transaction or not or if there are specific rules regarding how long banks and their customers have to correct errors.

 

[wdlugitch]

Why don't you tell us all how much money is ACTUALLY involved here, how much they should have debited and how much they actually debited, so we can tell you whether you will be defending a misdemeanor or a felony?

 

[Zigner]

The bank can correct it's error at any time dope.

 

[justadope]

The bank can correct it's error at any time dope.

So 10 years from now they can correct their error and legally recover from their mistake? How about 20 years from now? Are my heirs going to need to worry about this as well? Do you have any legal basis for what you are saying or are you just making it up?

 

[justadope]

Why don't you tell us all how much money is ACTUALLY involved here, how much they should have debited and how much they actually debited, so we can tell you whether you will be defending a misdemeanor or a felony?

Make up any number you like and tell me what statute I've violated. Arizona, Texas or Federal. Oh heck, imagine the numbers are $15K and $150. That should make it felonious not receiving a bill, right?

Am I also guilty of a crime if I pay for my gas with a credit card and the gas station never submits the charge to my bank or submits the lesser amount? Would that be the same statute I'd be guilty of or a different one?

Or how about if I write a check and it isn't cashed, am I guilty of theft in that case as well?

Anyone have any actual legal answers/advice to my question instead of a bunch of moralizing concern that some dope might not ever get billed for something. If not I'm going to go with racer's comment in another forum that you have 3 years in Arizona to bring suit over a mistake or you are SOL.

 

[Betty]

I know you don't want to hear this but inform the bank of their error!! How would you like it if a check you wrote for $100.00 was presented to your bank for payment & the bank debited your acct. for $1,000.00 in error. I'm sure you would rush as fast as you could to them for correction - you wouldn't wait for them to come across the error.

 

[justadope]

I know you don't want to hear this but inform the bank of their error!! How would you like it if a check you wrote for $100.00 was presented to your bank for payment & the bank debited your acct. for $1,000.00 in error. I'm sure you would rush as fast as you could to them for correction - you wouldn't wait for them to come across the error.

While moralizing is great fun, I'm posting this in a legal forum because I'm looking for legal advice.

For example, would Texas law apply or Arizona law. Texas appears like it requires billing errors be corrected in 6 months while Arizona is either 3 years or 6 years (oral or written contract). So I'm still looking for some legal advice.

 

[tranquility]

The law is a funny thing. Many people think that those knowledgeable in the law give answers, while most who have some knowledge ask questions and make arguments.

Criminal law tends to have two parts, the act and the mental state. The mental state is often the hardest to prove. Thanks to your question, if we find some act which would be a crime when combined with your deliberate, intentional state of mind, we have a completed crime.

Of course, not telling the bank you have some money of theirs is probably not a crime as there is no act. I'm not sure you have a duty to tell the bank under AZ statutes. But, now *my* question.

How are you going to get it out?

The act of writing a check or a withdrawal slip changes things. You know the money is not yours. You've said as much. That's too bad for you as that is the hard part to prove--what you know. Now, when you do the act to get the money, the bank may argue it was in your care and then it would be embezzlement. Or, it could be a simple fraud. In Arizona, any person who, pursuant to a scheme or artifice to defraud, knowingly obtains any benefit by means of false or fraudulent pretenses, representations, promises or material omissions is guilty of a class 2 felony. We could look farther, but will find some larceny involved.

I sense a whiff of homework and hope I did nothing more than point you in a direction. If I'm wrong, I'm pleased your questions have made it impossible to claim "oops" (meaning lack of intent) when you are caught by anyone with anything more than a cursory investigation.

Info edit:
If you did take the money, it would be income in the year in which you had constructive receipt. If you are audited before the crime is committed (when you have not done an act), you may have some explaining to do if the amount is large. One method the IRS uses in audits is called a "T" account. They put all the income on one side and all the expenses on the other. You will need to have reported all your income. While the IRS does not often put people in jail for claiming too many deductions against income, people who don't report income are at some risk. "You see your honor, I wasn't committing tax fraud. I was waiting for the bank to forget about the mistake so I could steal the money without anyone knowing."

Heck of a defense. Weird thing is, it might actually work as intent is the hard thing to prove in those types of cases as well. I mean, except for the question which just gave you the knowledge. Intent city!

 

[Zigner]

OP makes his state of mind (yippeeee, I got money I shouldn't have) clear as well as his act (using the money).

Shrug, this guy does NOT sound like he wants legal advice, rather, he wants someone to give him the answer that he wants to hear.