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IRS to put refunds on debit cards

The agency prefers direct deposit, but it will offer debit cards to taxpayers without bank accounts.

By Teresa Mears Jan 13, 2011 2:00PM

This article is from The Associated Press.


The Treasury Department is offering to put tax refunds on prepaid debit cards for low-income taxpayers who don't have bank accounts.


The department announced Thursday that it will send letters to 600,000 households next week, offering to put their tax refunds on the debit cards, which can be used to get money from ATM machines or to buy goods and services from retailers.


The Internal Revenue Service encourages taxpayers to have their tax refunds deposited directly into bank accounts. For those without bank accounts, the debit cards will allow them to avoid check-cashing fees.


Deputy Treasury Secretary Neal Wolin said taxpayers can get refunds faster with the debit cards than with checks.

 

"This innovative card can be used for everyday financial transactions, such as receiving wages by direct deposit, withdrawing cash, making purchases, paying bills and building savings safely and conveniently, giving users more control over their financial futures," Wolin said.

 

Cardholders won't have to pay service fees if they use the cards to withdraw money from ATMs in the MoneyPass network. They will have to pay regular service fees if they use ATMs outside the network.

 

The program will also be open to workers who get paid by their employers using payroll cards, which are similar to prepaid debit cards. The Treasury Department said more than 1.7 million U.S. workers receive their wages on payroll cards.

 

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

 

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45Comments
Jan 13, 2011 9:14PM
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As a person in the printing industry, I can tell you it is WAY more expensive to produce a plastic debit card than it is to print a check and mail it. Nice to see that this country is in so much debt and yet they can still come up with ways to spend more money.
Jan 13, 2011 9:31PM
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Why spend MORE money to send a letter asking?  Have it as an option at filing.
Jan 14, 2011 2:55AM
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This is not new,I have had my taxes put on a debit card the last 5 years and its great. I also have my wages on a payroll card and it works out great too.

With the tax card ,you don't have to wait weeks for your money ,you can have it on the card the same day you do your taxes.

Jan 13, 2011 10:11PM
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Another note: you CAN take out all of the money at once for no fee.

 

See my other post for more help.

Jan 14, 2011 12:33PM
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What the heck is the big todo about cards with small balances left on them????  I have done this numerous times -- so, I go buy what I want, use what's left on the card and pay the balance due!  Sheesh, people, not everything is a big conspiracy.
Jan 14, 2011 12:11PM
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HOW MUCH DOES IT COST US TO HAVE 600,000 MAILERS SENT OUT, AND HOW MANY PEOPLE TO BE HIRED TO KEEP TRACK OF THE DEBIT CARDS???

SOMEONE HAS TO STOP SPENDING OUR MONEY AND JUST GIVE US ALL LARGER REFUNDS

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By issuing the Debit Cards, the Fed is putting the burden of purchasing us out of debt onto the shoulders of the people least able to afford it.  Shame on them.  

 

People, put your money into the bank and save it for an emergency.  That way you won't have to borrow more if you do have an emergency.  The biggest problem with this country is the spending spree we've been on for the past 20 years.   Time to start saving and getting along with less junk.

Jan 13, 2011 11:19PM
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I have questions about the card. 1.) How long are they going to be good for? 60,90,180 days, 9 months, 12 months, Indefinite? 2.) IF you do not use all the money on the card (which I could hardly believe any body getting a refund wouldn't use it all) and the card is still good the next year, will they issue a new card with the new refund, and in effect the person having 2 cards? 3.) What happens if the card is lost or (God forbid)stolen, what about a replacement of the amount that was still on the card, how will that be handled?

Nope from what I'm seeing, this is NOT a good substitute for a check or direct deposit.

Jan 13, 2011 8:30PM
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Wilted roseDONT DO IT

Wilted roseDONT DO IT

Wilted roseDONT DO IT

Wilted roseDONT DO IT

ITS GOING TO COST YOU 2 DOLLARS OR MORE TO GET YOUR MONEY EVERY TIME FROM THE ATM AND WHEN YOU CALL THE 1800 TO GET YOUR BALANCE ITS GOING TO COST YOU 1 DOLLARS AND IF YOU GET YOU PIN WRONG AND RE DO IT IT WILL COST YOU 50 CENT.

Jan 13, 2011 8:49PM
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Ok so can I pay the IRS if I owe them with a pre paided card.

Jan 13, 2011 6:44PM
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This won't cost the government anything.  A bank issues the cards for the government for free as long as the issuing bank is allowed to throw in their fee structure.  This is just another cozy relationship between our wonderful government and the banking industry.  I work in the finance industry and they find multiple ways to charge fees on these transactions as well as the interchange income they collect for each transaction which are paid by all merchants wherever you swipe that card.  It should just be law that if you are FDIC insured, you are required to cash any government check at either no charge or a nominal fee of say 1% but this will never happen until every politician in office is held accountable and either shows results or is thrown out on the street.
Jan 13, 2011 8:19PM
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People wake up. This is another scam to help out illegal scumbag law breaking aliens who are afraid to open a bank account.
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I received a $70 rebate on a pre-paid debit card from Michelin after I bought four of their tires.  Evidently this procedure has been going on for some time.

 

Jan 13, 2011 8:21PM
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How is that going to help? Take money away from mom and pop stores that cash those checks for people who do not have checking accounts, that will help! Help the banks with atm fees, what a joke
Jan 13, 2011 6:35PM
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Boy does the government think we are ALL idiots? Hmmm.. lets see should I pay an ATM every time to get my money in small increments or pay one time and get it all? No brainer. The owners of these ATM's are the winners all the way around.
Jan 13, 2011 10:01PM
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This Will Cost US Citizens more money. no matter how you look at it, More issue will come with Debit cards being Lost or Stolen. ATM Machine will only let you take X amount of Money out a Day. So the government is budgeting your spending habits. NO Banks in My area have this Money pass Network. (Does the Government own the Money Pass Network also?) What happen to direct deposit ? This Is Just A Way For The Government to Track your Spending ? the government is just trying to control everyone and everything we do anymore. WE live in the USA The Land of the free.
Jan 13, 2011 6:50PM
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I think this is a good idea. The IRS should then track how people use their undeserved EIC money.  Then they (IRS) should demand congress cut out this expensive entitlement program

Jan 13, 2011 9:14PM
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All big corporations like Verzion Wireless and others use the debit cards when giving refunds or rebates. The reason is they hope you leave a few dollars on the card. You only have a so long to cash it out before it is canceled out. If 200,000 people leave just 5.00 on the card, that equals to 1,000,000 dollars they save. At just a few cents a piece to print, that is a lot of profit. The best thing to do with the card is pay a bill that will wipe out the card. When I get one from Verzion, I go to their store and put it all on my bill, even if it gives me a credit. I don't let them any more of my money in that scam. I liked it when they gave you back a check you could cash. Best bet is to skip the card and get a check. Good luck with your money!  
Jan 13, 2011 5:52PM
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It is a bad idea. It might be less expensive to give out debit cards but it also gives the

gov't a means to track what you spend the money on. If you don't want them to see then go to an atm and spend the extra on fees. I for one don't think the feds need to know what is spend my refund on, thank you very much.

Jan 13, 2011 9:55PM
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I work with Direct Deposit of checks and all banks and debit cards  have different rules. It's best to call the 800 number on the back of the card or to check with the banking agency that handles the debit card, but usually the first inquiry of current funds on the card is free but charged for other inquiries. This debit card might also serve for any other 'deposits' of money depending on the banking agency - call for details. IF the person receives any other federal check (Social Security, Supplemental SSI, Railroad Retirement, Veterans, Civil Service) they might possible be set up for Direct Deposit on that card. Also check with the 800 number of the banking institute to see if any other money from personal sources can be deposited on that card.

 

My advice is to get a bank or credit union account if possible! Having an actual banking institute to call or go to is helpful. BUT if you only have a card:  write down all the numbers (card number, your name as it appears on the card, 800 number from the back for customer service, 3 - 4 digit security number from the back, and account number you will get from calling the customer service 800 number on the back of the card) to keep in a safe place if your card is misplaced or stolen! Note: the debit card number on the front IS NOT the account number.

 

Hope this helps and this is just the way it's going to be, good or bad.Red rose

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