Treasury Introduces Prepaid Debit Cards for Tax Refunds


The Treasury Department on January 13 announced a pilot program of prepaid debit cards to allow taxpayers without bank accounts to receive their tax refunds more quickly.

The Visa debit cards will be available only to taxpayers who receive an offer letter from Treasury. During the pilot program, Treasury will invite approximately 600,000 taxpayers to apply for the card.

Treasury is touting three advantages of the cards for taxpayers: (1) faster tax refunds compared to paper refund checks; (2) free cash withdrawals at ATMs on the Visa network, avoiding check-cashing fees; and (3) consumer protections if the card is lost or stolen.

Taxpayers who have a card will be provided bank name, routing number and direct deposit information to use on their returns; their refund will then be deposited onto the card. Taxpayers will also be able to use the cards to receive direct deposit of state tax refunds.

The cards will be Visa Prepaid Debit Cards administered by Bonneville Bank and managed by the bank’s prepaid debit card program manager, Green Dot Corp. Once funded, the cards can be used to get cash at ATMs or to make purchases. The pilot program will include cards with a variety of features and fee structures, to allow Treasury to evaluate various combinations. The four different offers will be:

1. Card with no monthly fee and no linked savings account;
2. Card with no monthly fee and a linked savings account;
3. Card with a $4.95 monthly fee and no linked savings account; and
4. Card with a $4.95 monthly fee and a linked savings account.

Taxpayers will receive one offer from Treasury and will not be able to choose among the four offers.

The pilot program stems from Treasury’s concern that taxpayers without bank accounts are forced to use “high-cost alternative financial products,” such as check-cashing services and refund anticipation loans, because they do not have an account in which to receive their tax refunds and presumably do not want to wait for a paper refund check to be mailed. See “Treasury Announces Low-Cost Financial Account Program for Taxpayers.”

Treasury is also working with ADP Inc. on another pilot program to encourage taxpayers to choose direct deposit for their tax refunds. More information on the program is available at myaccountcard.gov.

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