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Direct Deposit Payments Made in Error

The process to reverse an erroneous direct deposit payment depends on the type of payment. Reversals of vendor/travel payments and payroll payments have different procedures and timelines.

The National Automated Clearing House Association (NACHA) establishes the deadline for a reversal request. NACHA requires that the request be “Transmitted or made available to the RDFI within Five Banking days following the Settlement Date of the Erroneous Entry” (payment).

Payment Services processes reversal requests as they are received, and they are transmitted to the Receiving Depository Financial Institution (RDFI) the next business day. A reversal settles (posts) in the payee’s account on the following banking day after it is transmitted.

Reversal Request

If you determine that a direct deposit payment was made to an incorrect payee, for an incorrect amount or is a duplicate payment, you can submit a Direct Deposit Reversal Request form (74-191) to retrieve the erroneous direct deposit payment. A reversal request is an attempt to reverse the payment; it is not a guarantee the funds will be recovered.

The deadlines differ for a Vendor/Travel Reversal and a Payroll Reversal, but the same form is used for both types of reversal requests.

  • The form must be completed in full. Payment Services will not process an incomplete reversal request.
  • Always call Payment Services at (512) 936-8138 to verify receipt of your request.
  • NACHA rules also require that the payee be notified of the reversal as outlined in the form instructions. This requirement is a notification; you are not seeking permission for the action.
  • When your agency submits this form to Payment Services, you are attesting to the accuracy of the information, including the Reason for Reversal.
  • The submitting agency should retain the original or a copy of the request form.

Agencies may not contact a payee’s financial institution to request the return of an erroneous direct deposit payment. NACHA rules require electronic reversals through the ACH network and by the originator (Comptroller) of the payment. An agency may contact the payee’s financial institution to assist in tracking the payee’s direct deposit payment.

Successful Reversals

When the funds are received by the Comptroller’s office, Payment Services sends your agency’s Direct Deposit Bill or Payroll Coordinator a secured email notification that the funds have been returned. The email contains only the payee’s name and dollar amount of the reversal request(s).

  • Funds returned for vendor/travel reversals as deposited to the agency’s fund 0980 in USAS.
  • Funds returned for payroll reversals are deposited to the agency’s fund 9014 in USAS.

Unsuccessful Reversals

When funds are not returned by the payee’s financial institution, Payment Services sends an email notification to the Direct Deposit Bill or Payroll Coordinator. The email includes the Return Code and description that explains why the funds are not returned.

Your agency must contact the payee directly to recoup an erroneous direct deposit payment if:

  • The request is not honored when the payee’s account is closed or the account has insufficient funds. NACHA rules require the entire amount be reversed and prohibits the return of partial payments.
  • The erroneous payment is identified by the agency after the reversal deadline allowed by NACHA.

An agency that is unable to recoup the funds shall report the payee as being indebted to the state, as required by the Texas Government Code, Section 403.055 (f) and (g).

The Comptroller’s office recommends:

  • The agencies set up a group email account (such as to ensure your agency receives direct deposit notifications even if someone is out of the office.
  • The Direct Deposit Bill or Payroll Coordinator should set an out-of-office message to alert Payment Services to resend the notification to a backup contact.

Please submit the Contact List Update Form as needed to update your Direct Deposit Bill and/or Payroll Coordinator to ensure prompt notification of direct deposit return money or rejected reversal requests.