Sarah Torres faced a nightmare when two vital government checks worth $212,853 were frozen due to a clerical error with her business’s EIN. Without access to her funds, A Sweet Affair Bakery in Walnut Creek, CA was at risk of closure. Torres struggled for over a month, resorting to desperate measures.
The Employee Retention Credit program was created to assist businesses during the pandemic, providing a lifeline for Torres’s bakery. Despite not receiving PPP loans, the frozen funds caused immense stress. Attempts to resolve the issue with the IRS and Bank of America proved futile, leaving Torres in a dire situation.
Bank of America cited a discrepancy in tax identification numbers as the reason for the frozen funds, causing unnecessary hardship for Torres. Tax experts believe the bank should have been able to identify and resolve the issue promptly, preventing the situation from escalating.
An EIN verification letter is crucial for banks to verify a business’s legitimacy, but discrepancies can lead to frozen accounts for investigation. Suspicious transactions, non-compliance with regulations, legal disputes, debts, or inactivity are common reasons for account freezes.
The Torres case sheds light on the challenges small businesses face against large financial institutions. Despite the funds being unfrozen, the ordeal serves as a warning for business owners to maintain accurate business information to prevent financial crises with banks. A minor error can have severe consequences. Detailed record-keeping and consistency with business identification numbers can prevent potential issues. This article serves as informational guidance, not advice, and is provided without warranty.
Read more at Yahoo Finance: California bakery had $212K go missing, bank account frozen over clerical error. Are US banks allowed to do that?