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
TrishaDishaWarEagle
April 22nd, 2011
3:06 pm
and how is a plastic debit card cheaper for the state than a printed check ?
TrishaDishaWarEagle
April 22nd, 2011
3:10 pm
I’ll answer my own question..It’s NOT cheaper for the state.
This is just more pandering by state agencies to the % of illegals who have had some state taxes withheld..no valid SS#, no bank account. Debit card doesn’t need a bank account..
Aquagirl
April 22nd, 2011
3:18 pm
I’m betting it’s the banking industry. They’ve been doing this crap with colleges, trying to get students to accept their cards for student account transfers. One of those public-private partnerships so beloved by some Republicans.
Corey
April 22nd, 2011
3:21 pm
Trisha, you paranoia, xenophobia, racist, bigotry obsessions have the nearest Georgia Regional mental institute already preparing for your extended stay. Enjoy your stay, Trish. I hear the cafeteria workers have names like Maria, Jose, Shaquita, Kamal and Towanda.
Centrist
April 22nd, 2011
3:23 pm
Also a likely moneymaker for the state, since debit cards are also like gift cards. Gift card purchases totaled $91 billion in 2008, but 10 percent of the cards were never redeemed, according to CreditCardChaser.com, leaving approximately $9 billion of cards unredeemed.
yea right
April 22nd, 2011
3:24 pm
hmm, could be an activation fee, monthly maintence fee, dont worry somebody is going to be making money from it; and of course if you dont use it you lose it…
they do the same with HSA, monthly fees and zero rollover. ppl lose money on not allowing the rollover but who gets to keep it???????
Corey
April 22nd, 2011
3:29 pm
Actually, the state will be able to track the spending habits of those who receive their refunds via debit cards. I don’t know what they will compile those data to be used for. The recipients of the debit cards are people who mainly do not have checking accounts or do no e-file their returns, primarily the poor. But then again, maybe it really is more cost effective than having to print, process and account for cleared checks.
Last Man Standing
April 22nd, 2011
4:00 pm
I don’t think the state is going to be impressed with my spending habits as I intend to deposit it to my checking account upon receipt. This has to be one of the more brain-dead ideas they’ve come up with yet – and that is saying a lot!
Last Man Standing
April 22nd, 2011
4:02 pm
Corey:
I see that you went off on a rant to TDWE. When you recover your mental capacities, let us know . . .
Last Man Standing
April 22nd, 2011
4:06 pm
Trisha:
“This is just more pandering by state agencies to the % of illegals who have had some state taxes withheld..no valid SS#, no bank account. Debit card doesn’t need a bank account..”
I had not thought of it that way, but you do make sense. I’m going to start watching the local illegals in the grocery store and see if that is what they are using for payment.
td
April 22nd, 2011
4:43 pm
Check processing fees are more expensive for the state then issuing a debit card. Saves the state almost $1 per refund sent out. Centrist is also right about the unused money that will be returned to the state after some time. The other item to consider is that with a debit card the money will have to be spent in our stores instead of some people cashing the check and using it to purchase illegal drugs.
Last Man Standing
April 22nd, 2011
4:51 pm
td:
“The other item to consider is that with a debit card the money will have to be spent in our stores instead of some people cashing the check and using it to purchase illegal drugs.”
I was told by the Department of Revenue that I could take it to a bank and cash it out, or deposit it to my checking account. What would stop the illegals from cashing their cards out?
Mike K
April 22nd, 2011
4:58 pm
IIRC, other times the debit card has been introduces, fees were taken out of the amount on the card, e.g. a $2 transaction fee.
DW (the real one)
April 22nd, 2011
5:14 pm
total d0uche in the house!
DW (the real one)
April 22nd, 2011
5:17 pm
I mean God forbid if somebody were to take money out their own hard earned tax refund and buy a quarter bag of weed. Dont you idiots have more important things to worry about like finding Obamas REAL birth certificate (whatever that is)? Retards..
JD
April 22nd, 2011
5:44 pm
The major problem is that if these cards are stolen from the mail, there is no way to know. At least with a check, someone must forge the back to cash it. You can track where the card is used, but it will be too late to catch anyone.
Last Man Standing
April 22nd, 2011
5:46 pm
DW (the real one):
“total d0uche in the house!”
Thanks for identifying yourself! I’d always suspected the truth anyway . . .
David Hoffman
April 22nd, 2011
5:49 pm
This debit card might be an attempt to help those who would normally have to pay high check cashing fees at those “Check Cashing” or “We Cash Checks” places, avoid those fees.
td
April 22nd, 2011
5:51 pm
DW (the real one)
April 22nd, 2011
5:17 pm
I see my drunk friend is back and now he lets us know that he also gets high. Good liberal progressive values there my friend. I bet you will let us know later that you have a child that you o not see and do not pay child support for. That will make you the poster child for the government.
td
April 22nd, 2011
5:52 pm
LMS,
So much for my last thought about the drug angle but if it saves money for the state (the taxpayer) then it is a good thing.
DW (the real one)
April 22nd, 2011
5:59 pm
LMFAO! TD and LMS are like 2 idiots in a pod..
"Random" Taxpayer
April 22nd, 2011
6:04 pm
I was one of the lucky ones randomly chosen to receive the card. It’s issued on a Bank of America Visa. My bank looked at it like it was counterfeit. They had no idea what I was talking about when I said it was my tax refund! Finally had to go to Bank of America, get cash ($2,000+) to avoid fee (which I refused to pay from MY refund) and drive back to my bank and deposit the cash.
They do state that the money remaining on the card at the end of 9 months will be refunded in a check to the tax payer for no fee. Wonder how much that will cost us?
I would have opted for deposit to my bank account, but the online form that I used did not offer that as an option. If asked, I never would have chosen to receive a debit card!
Adonis
April 22nd, 2011
6:07 pm
Does DW stand for Dim Wit?
Alabama Communist
April 22nd, 2011
6:08 pm
No doubt little big brother Republicans will debted your accounts and you will never know and they will blame it on Obama Mastercard..
td
April 22nd, 2011
6:14 pm
Adonis
April 22nd, 2011
6:07 pm
Does DW stand for Dim Wit?
I use to think it was Dill Weed but after today I think it must mean Drunk Wacko.
Lee
April 22nd, 2011
6:15 pm
What’s the over/under on the percentage of these cards that get stolen from mailboxes?
Bob
April 22nd, 2011
6:20 pm
Very disturbing news. If I lived in Georgia and asked for a paper check refund and was sent a debit card instead, I’d file the biggest lawsuit the state had ever seen. Federal and state governments alike are hell-bent on destroying the individual’s ability to decide how best to handle his or her money through mandated direct deposit and/or debit card policies. If someone wants a paper check, what’s the big deal? Most people either accept or want electronic-only movement of money, so the tiny proportion of us who want a paper check aren’t having any measurable impact on the so-called expense of doing so.
Whether it’s pay, social security benefits, income tax refunds, or government business transactions, those wanting a paper check should be allowed to receive it. Oddly, some of the ones who complain the most about Big Brother watching their every move are the quickest to embrace this change.
Makes you wonder where their heads are.
Thomas
April 22nd, 2011
6:30 pm
Centrist
April 22nd, 2011
3:23 pm
Your point of view has merit.
td
April 22nd, 2011
6:32 pm
I just heard a story that the SSA is going to direct deposit and no more paper checks. They said it would save $1 billion per year.
Adonis
April 22nd, 2011
6:41 pm
Does Weed. But just a quarter bag.
steve
April 22nd, 2011
6:45 pm
Bob: You’re probably one of the idiots who wants a paper airline ticket everytime you fly.
Bob
April 22nd, 2011
6:54 pm
td, you’re partly right. Social Security payments will only be issued by direct deposit or debit card and not by paper check. Takes effect May 1 for new enrollees, and in two years for those who are currently receiving benefits by paper check. Won’t save a billion per year, though. Quite a bit less.
At least I found out about the change during the comment period on the rules change and got to weigh in on Treasury’s absurd lack of logic in justifying the move. I didn’t expect to convince anyone there of the fallacy of their so-called logic, but at least my comments are on record.
These electronic-only transfer of money policies simply make it incredibly easy for cyber-terrorists to bring the economy to a screeching halt.
Pogo was right.
Bob
April 22nd, 2011
7:06 pm
Steve, IF I flew, I would. I rarely travel any great distance, and my car is my prefered mode of transportation. But since you raise the issue, I wonder why you think anyone who does want a paper ticket should be called an idiot. If you want to pay for stuff with a credit card, debit card, check, cash, or even trade brown eggs and butter for your new LCD TV, it’s fine with me. Me, I’d write a check, and if the seller won’t take it, he/she doesn’t get my business. How I pay, or whether I want a paper ticket shouldn’t have any real impact on you. Any more than if I like Cheerios and you’d rather eat Captain Crunch. As long as we both have what we like, we’re both happy. Doesn’t seem like there’s anything idiotic about that.
G
April 22nd, 2011
7:24 pm
actually, the reason is very simple. 90% of the people who get them won’t cash them out right away, letting the state collect bank interest on the money not spent. even if ga buys t-bills or some other short term fixed annuity, it’ll pay more than if they just hand it all out at once.
DJ
April 22nd, 2011
7:58 pm
The only thing that I’ve always disliked about these cards, including store gift cards is that if every single cent from this card is not spent, which many will not end with a zero balance, the remaining monies go back to the distributor (i.e. re-contributing to their bottom line). I guarantee there is additional state revenue that will be made from this.
logic
April 22nd, 2011
8:11 pm
Enter your comments here
logic
April 22nd, 2011
8:12 pm
This costs GA less because the bank makes MORE on the float. Same difference to the recipient–if they just deposit it, it is EXACTLY like a paper check. And if the state is out of money, wouldn’t you rather they do this than raise your taxes??
Ray
April 22nd, 2011
8:26 pm
Wow, not a single one of you nailed it above. It has to do with delaying payment. If you put the debit card in your purse or wallet and spread the withdrawels out over time, you help Georgia with its cash flow problems. If you lose it during the year, as may very well happen, do you think Governor Deal is going to send you a notice that you have unused balances remaining.
Most people will run a check to the bank within the first couple of weeks of receiving a check.
dawgfan
April 22nd, 2011
8:33 pm
they are counting on some people to either lose their cards or not use it all up and then the state ends up with extra money.
Just Saying
April 22nd, 2011
8:37 pm
Had a friend whose refund check was “stolen” and they had to wait for the bureaucracy of an investigation before the bank who cashed the check reimbursed the State’s bank and the State reissued payment. I’m guessing, there is some type of activation process which makes these cards worthless to those who would rather steal it than earn it. Sounds like a good idea to me.
logic
April 22nd, 2011
8:42 pm
Btw, it’s not just Georgia: the IRS just gave 600,000 taxpayers the option of recieving their refund via debit card. The bottom line is that it is cheaper for the govt to do it via debit card, so in these lean times they are exploring the option.
Bob
April 22nd, 2011
9:17 pm
Explore today. Mandate tomorrow. Either way, it’s an example of unwarranted government intrusion into people’s lives.
Zinc
April 22nd, 2011
9:19 pm
Ladies and gentlemen that is your Republican Governor and Republican Legislature at work. You voted them in, ‘DEAL’ with it. I will continue to roll my eyes at all the ignorant statements regarding illegals, government tracking your spending, etc. I thought these Republicans were looking out for your interests.
You Asked
April 22nd, 2011
9:35 pm
Logic is correct – I work for the state and wondered why DOR was doing this. The bank is paying the coast instead of revenue having to process checks with the accompanying cost. It is saving the taxpayers money.
I can’t speak to the person who had trouble getting their bank to accept the card. I would report that to the Department of Revenue and let them know there was an issue so they can fix it in the future.
http://www.dor.ga.gov
@ Zinc
April 22nd, 2011
9:39 pm
Our federal government is run by democrats, so what is your excuse with their offer of debit cards for refunds?
Ray
April 22nd, 2011
9:48 pm
@Zinc:
This is a State of Georgia plan (and run by Republicans for quite some time). Not that matters.
Silent Jay
April 22nd, 2011
9:59 pm
Gotta wonder who’s the Republican buddy in the plastic biz.
A hidden 3-cent gas tax and coming soon: Toll lanes!
Thanks for getting government out of our lives.
watcher
April 22nd, 2011
10:07 pm
I work at a bank in North Georgia and have seen how these debit cards are used. They can take them to an ATM and make cash withdrawals on them for the entire amount in $300.00 increments draining the ATM. No id needed
"Random" Taxpayer
April 22nd, 2011
10:20 pm
Yes, you do have to activate the card by giving your life history and the amount that is on the card. Don’t lose your copy of your tax return with the amount on it. There is nothing with the card to indicate the value stored on it. I guess that’s good.
I agree – someone has a friend in the plastic business. Guess they got a good deal.
Sure you can make multiple withdrawal at the ATM until you have all of our money, but I think that begins to involve multiple fees.
Socrates
April 22nd, 2011
10:42 pm
Of all the shared ignorance, this takes the cake. Logical discussions will stick to the issue, avoid both name calling and blame. I won’t weigh in; I never match wits with an unarmed mind
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April 23rd, 2011
3:52 am
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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?