There is nothing illegal, against Treasury regulations, or against banking regulations, that prevents someone from endorsing a Treasury check or IRS refund check and transferring the check to another party. Once a check has been endorsed by the payee it becomes a bearer instrument and can be negotiated or cashed by anyone in possession of the check. However, and this is a big however, most banks will not cash third party checks regardless of where the check originates. For more information on these types of checks see, what is a third party check.

The banking industry has been cracking down on third party checks over a concern for fraud and fraudulent signatures since the bank cannot identify the original payee of the check and verify their intention to transfer the check to the third party. If the endorsement turns out to be fraudulent, the bank will be responsible for the loss after they cash the check. IRS is also well aware of this issue and states that tax refund checks and direct deposits should only be deposited directly into accounts that are in the tax payers own name; their spouse’s name or both if it’s a joint account.

Most banks will not cash a third party check even if the check comes from the IRS or US Treasury. It may be possible to find a bank that will accept the check if both parties are present and can prove their identities to the bank’s satisfaction

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