Checking Account Fraud Question

[Lee B]

Small monthly write up client an Espresso Coffee Kiosk banks with one of the big 3 national banks.

Back in September their checking account was charged twice with ACH Debits totaling $ 1,498

from a small former supplier from several years ago. My client notified their bank as soon as they received

their September Bank Statement of the fraudulent charges. Their bank told them they couldn't do anything,

because they weren't notified soon enough. I had my client file a Police Report. 

Is this a deductible business expense?

 

[Abby Normal]

I've never heard that theft loss is not deductible and have deducted it a few times myself.

[Gail in Virginia]

I'm just curious - if you notify the bank as soon as you get the statement, but that isn't soon enough, just how soon do you have to notify them of fraud?

And while i would want to deduct this loss, doesn't it have to be done as a casualty and theft loss?

[Lee B]

12 minutes ago, Gail in Virginia said:

I'm just curious - if you notify the bank as soon as you get the statement, but that isn't soon enough, just how soon do you have to notify them of fraud?

And while i would want to deduct this loss, doesn't it have to be done as a casualty and theft loss?

Most of us are familiar with the rules protecting personal checking and credit card accounts. However, business checking and business credit card accounts

have far more lax protections.  Although many financial institutions will apply personal account protection rules to their business accounts.

Unfortunately for my client their very large bank has been very unhelpful.

 

[Terry D EA]

Wouldn't this trigger a dispute on the client's part? If so, I think the bank would investigate the charges to see if they are indeed legitimate. I would recommend the client go to the top in the bank and then maybe contact an attorney to possibly pursue this further. The statement it is too late from the bank is disturbing. I agree with Gail, I would want to know what the definition of too late is exactly. Did they see the statement on line and immediately call or did they receive it in the mail and then immediately call. Either way, too late doesn't cut it.

[BulldogTom]

15 minutes ago, Terry D said:

Wouldn't this trigger a dispute on the client's part? If so, I think the bank would investigate the charges to see if they are indeed legitimate. I would recommend the client go to the top in the bank and then maybe contact an attorney to possibly pursue this further. The statement it is too late from the bank is disturbing. I agree with Gail, I would want to know what the definition of too late is exactly. Did they see the statement on line and immediately call or did they receive it in the mail and then immediately call. Either way, too late doesn't cut it.

Not True.    I went through this myself with a vendor I cancelled service with who charged me an annual fee months later.   I changed banks because Rabobank (Robberbank in my world) has a policy that electronic transfers from your account must be challenged by the next business day.   Otherwise it is considered legit on their part.   Now I bank with US Bank, but i think the rules are the same.

Tom
Modesto, CA

[Lee B]

Exactly, my  client's bank told her, they required notification the next business day in order to reverse the charges.

[DANRVAN]

5 hours ago, Gail in Virginia said:

doesn't it have to be done as a casualty and theft loss?

Form 4684 section B since it is property used in a business and does not meet the inventory exception.