Using debit cards to phase out paper checks for state income tax refunds?
This one slipped by us: Earlier this week, the Atlanta Business Chronicle reported that the state has embarked on a pilot program of using debit cards for state income tax refunds – with the aim of ultimately eliminating paper checks:
The debit cards will be mailed to some taxpayers who elected to receive a 2010 Georgia income tax paper refund check. Taxpayers who chose electronic direct deposit of their income tax refund will continue to receive their refunds electronically.
Certain taxpayers will receive a debit card worth the amount of their 2010 Georgia income tax refund. Debit card recipients can transfer the amount on their card into their bank account without charge, just as they would deposit a paper refund check. The debit cards can also be used to make a variety of retail transactions including payment of bills either online or over the telephone.
- By Jim Galloway, Political Insider
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67 comments Add your comment
Using debit cards to phase out paper checks for state income tax refunds? | Conservative GA
April 23rd, 2011
3:52 am
[...] http://blogs.ajc.com/political-insider-jim-galloway/2011/04/22/using-debit-cards-to-phase-out-paper-... Click here to cancel reply. [...]
Buzz G
April 23rd, 2011
8:49 am
C’mon Jim Galloway. Don’t you remember the basics from Journalism 101. What? Where? Who? When? Why? Your article fails to answer at least 4 of the 5.
Jake's mom
April 23rd, 2011
9:10 am
Wow…you people are nasty today!
gdrla
April 23rd, 2011
9:21 am
I way around this issue – DO NOT GET A TAX REFUND FROM GEORGIA. Most taxpayers in GA who get a refund are in actuality getting their own $$ back because they overpaid their taxes. It is my practice to owe a small amount (50-100 dollars) each tax season. I can better manage my own $$ then the government. So, what’s all the fury & ruckus? Become somewhat financially literate and better manage your own money and financial affairs. And viola, no refund on a debit card!
gooberpeas
April 23rd, 2011
9:57 am
I’m going to use mine at the grocery store on sunday to buy beer.
MountainMan
April 23rd, 2011
10:04 am
It does cost a lot of money to issue checks. It cost the IRS 128 million dollars to issue the stimulus checks one year. If the state wants to avoid some of tose costs they need to put direct deposit information on their online forms.
Mitzymy
April 23rd, 2011
10:41 am
One of the reasons for the cards is to track the spending habits of poor people who receive large refunds. When the victims of Katrina received the debit cards, the government traced their spending to designer bags at Loui Vitton stores and plasma tv’s even though they had no place to live. They tracked every penny that they spent and where it was spent. I work at H&R Block and they also offer the debit cards. A lot of money was saved in not printing paper checks for the refunds, but you have to get all of your money off the card anyway that you can, because it will be lost if you don’t and I think there is someone somewhere hoping this will happen.
Mike
April 23rd, 2011
11:24 am
I’m a CPA, and I agree with gdrla’s opinion – a refund is an interest-free loan to the government. Your withholding should match your tax liability.
The best reason I’ve heard for wanting to get a big refund is from people who have no mortgage – they use the tax refund to pay their property taxes. It’s like an interest-free government-run escrow account.
Facts
April 23rd, 2011
11:51 am
Debit Cards mean that you have to “swipe” your card for every purchase and with every single purchase the issuing bank makes money no matter how little the purchase. Businesses pay 2 – 3% in addition to processing fees that are about $0.30 for each transaction.
So using the debit cards somebody made some deals and some people are getting paid for doing this
Laurie
April 23rd, 2011
12:45 pm
These cards come with the risk of hidden fees. Bottom line, people should be paid in a manner that will allow easy access to the funds without paying additional money to get it. If the state can guarantee that, then I don’t care how they pay me.
Clarkston
April 23rd, 2011
1:52 pm
My first thought was the same as the first poster expressed – how is a plastic debit card cheaper than a paper check? My immediate second thought was someone’s getting a nice kickback for this. Look for the Revenue Department beuron who suddenly shows up for work in a new Porsche.
Tfreize
April 23rd, 2011
2:03 pm
This debit card system is designed to make them whole bunch of money. Everytime you use it, it will be a fee…. $1.50-$3.00 depending on where you use it. The way to eliminate the fee is to either pull your money out all at once or transfer the money to your bank… If you have no bank account your really gettin the short end of the stick!
logic
April 23rd, 2011
2:22 pm
It doesn’t make the DOR any money. But yes, it will likely make the bank some money. Which is part of the reason (that and the fact that they make extra money on the float) that they will do it for the DOR at a cheaper rate. So the state, which is out of $$, can do it more affordably this way than via paper check. Whether you like the system or not, it’s not about any sort of shenanigans. It’s about saving money that the state doesn’t have to spend. Or they could raise your taxes…like that solution better?
Besides, I’m guessing that any of you who are informed enough to be reading things like this political blog are smart enough to know just to take it straight to the bank and deposit it just as you woudl a paper check (that’s if you haven’t eliminated your need for a refund or have arranged for it to be direct deposited like majority of people (north of 70% for federal returns, not sure of # for GA).
catlady
April 24th, 2011
12:55 pm
Trisha, while you can be sure SOMEONE profits on this, it isn’t the “illegals.” It would have to be an entity with more “pull” than they have. Someone like Deal’s banking buddies, to whom he owes much, for example . There are several ways to profit. First, the float/state paid usage fees on the money. Second, if someone loses it, they won’t use it. Third, there are some folks who don’t know how to use them, so they might never “cash” it. I am sure there are even more avenues of profit for certain folks.
catlady
April 24th, 2011
1:09 pm
MountainMan, didn’t that figure include the postage? And won’t this have at least as much postage to send?
catlady
April 24th, 2011
1:21 pm
BTW, Trisha, if someone uses your SS number and you have also worked, it will kick out an error, as their reported info does not match the claim. You know the government already KNOWs how much money you made, right?. Secondly, “illegals” use tax id numbers, which are different from SS numbers, to report their taxes and get refunds.
Logic, I’d want to know what the bank is getting in exchange.
Deborah Edwards
April 25th, 2011
3:00 pm
This debit card has been nothing but a hassle!! I live in a small town with one ATM machine. My bank could not deposit the refund, and I was told to use the ATM machine outside the bank. My refund was for $320, and since only $300 can be withdrawn at one time, I was charged $6 by Bank of America to get MY MONEY in two withdrawals!! I am very upset that the government is using my tax refund money to pay a private corporation money that doesn’t belong to either one!!!! I spent three days on the phone with the Georgia IRS before I used the card, but no one knew how to ‘undo’ the debit card and issue me a check. Does anyone know of legal recourse?