A reversal request may be made by the paying agency for an erroneous direct deposit payment that has been transmitted to the automated clearing house (ACH) network. A reversal is an attempt to retrieve the funds; it is not a guarantee the funds will be recovered.
Each agency is required to process its own reversal requests via the Direct Deposits – Reversals and Reclamations (DDEP) web application. See Instructions for the DDEP Web Application for complete information.
The Direct Deposit Reversal Request form (74-191) should only be submitted if the agency is not able to access DDEP to process its own reversals. The agency must provide an explanation why it is not able to access DDEP.
The reversal process depends on the type of payment that was issued. Vendor/travel reversals and payroll/annuity reversals have different procedures and timelines. The National Automated Clearing House Association (NACHA) establishes the rules, deadlines and criteria for a reversal:
- The reversal request must be processed no later than four banking days from the settlement date of the payment.
- The reasons for a reversal are limited to:
- Incorrect payee.
- Incorrect payment amount.
- Duplicate payment.
- Incorrect payment date.
Payee Notification
As required by NACHA, the paying agency must notify its payees that a reversal will be submitted on their payment. The notification should reference the payment number, payment amount and payment date of the payment that will be reversed. The agency must maintain the documentation for audit purposes and to ensure the requirement is met. The notification deadline is no later than the reversal settlement date, which is two banking days from the date the reversal is processed in DDEP.
This is a notification, not a request for the payee’s permission to reverse the erroneous payment. When payees sign the Direct Deposit Authorization form (74-176) or the paying agency’s authorization form or electronic authorization, their signature confirms their understanding that the Comptroller will reverse any payments made in error on behalf of the paying agency.
Agencies that create their own authorization form or electronic authorization method must ensure the authorization language on their forms is identical to Section 6 of the Comptroller’s form.
Agency Restriction
NACHA rules require electronic reversals, which must be processed through the ACH network by the payment’s originator. If the direct deposit payment was issued through the Comptroller’s office, the Comptroller is the originator of the payment, and only the Comptroller is authorized to transmit reversals for those payments.
Agencies may not contact a payee’s receiving depository financial institution (RDFI) to request the return of an erroneous direct deposit payment. The agency may contact an RDFI to assist its payees in tracking their payments if the payees report their payments have not been posted to their accounts by the settlement date.
- The paying agency should determine the exact settlement date of the payment(s) in question before contacting the payee’s RDFI to confirm receipt. DDEP displays the settlement date for each payment.
- If the payee’s RDFI is unable to locate the payment and requests an ACH trace number, the agency must complete and submit the Direct Deposit Payment Trace Number Request form (74-229) to Payment Services. A separate form is required for each payment.
Successful Reversals
A successful reversal is one that results in the retrieval of funds for the reversal transaction. Funds received for payments issued via the Uniform Statewide Accounting System (USAS) are credited back to the paying agency five banking days after the reversal process date and are deposited into USAS Fund 0980 for:
- Vendor payment reversals.
- Travel payment reversals.
- Annuity payment reversals and reclamations.
Agencies may request that funds for USAS payments be deposited using the payment’s original coding block, which eliminates the need for the agency to process a journal voucher to transfer funds from Fund 0980 to the original fund the payment was issued from. To select this option:
- Email [email protected].
- Include “Change Option for DDEP Funds – XXX” in the subject line with the three-digit agency number in the XXX position.
The agency can download a report that lists payees whose funds were credited back to the agency. See Reversal/Reclamation Reports. Agencies can also track the status of their reversals on DDEP. See Payment Search for more information and step-by-step instructions.
Funds received for payroll direct deposit payments will continue to be deposited into USAS Fund 9014.
Unsuccessful Reversals
When an RDFI rejects a reversal request, agencies receive notification via a report that can be downloaded with their daily bundle of reports. See Reversal/Reclamation Reports. The status of a reversal that is rejected by the RDFI can be searched on DDEP. See Payment Search for more information and step-by-step instructions.
If a reversal request is rejected, the paying agency must contact the payee directly to recover the erroneous direct deposit payment. NACHA requires the entire amount to be reversed and prohibits the return of partial payments.
An agency that is unable to recover the funds from the payee must report the payee as being indebted to the state, as required by Texas Government Code, Section 403.055. See Warrant Hold for more information and instructions for reporting state debts.
