TurboTax Wants to Help Taxpayers Spend Their Refunds
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The $200 is the 15 percent discount the retailers would give for gift cards totaling $1,000. Discounts will vary by retailer, but for example, by spending $85 of the refund, a taxpayer could purchase a $100 Blockbuster Video gift card, wnct.com says. The catch is that an additional $14.95 shipping and handling cost will be added to the purchase price. Thus, the only way a participant can benefit significantly from the program is by spending much more than $85.
TurboTax users would have to file their federal income tax return through TurboTax and specify that their refund money goes to the refund bonus program. TurboTax will FedEx the gift cards to filers and will deposit the portion of the refund that filers choose to get back in cash, directly to their bank accounts, according to Scott Gulbransen, TurboTax spokesman, eastvalleytribune.com reports.
“In doing research every year on people and how they do their taxes and what they do with their refunds, we learned that people don’t take their entire refund and do one thing with it. . . . They absolutely could get their whole refund in gift cards, but most of the customer research we did said that most people would not choose to do that,” Gulbransen said. He added that TurboTax wasn’t encouraging people to spend all of their refund money, but first to pay off debt and set aside some in savings, eastvalleytribune.com says.
The gift cards do not have expiration dates, but the terms and conditions vary with the retailer.
Plastic gift cards have become a big business, exceeding $115 billion in sales in 2005, according to the Nilson Report, which monitors the credit industry, the Washington Post reports. The National Retail Federation estimated that three out of four consumers purchased gift cards over the 2005 holiday season. Most gift cards are store cards, like those being offered through TurboTax, but major credit card companies have been offering similar products that have a cash value.
Bank gift cards have not worked as well as store cards, the Post says. Once the purchaser has used some of the card’s value and tries to use the remaining, the card may be rejected if the purchase exceeds the amount of money left on the card. The user must know the exact balance remaining on the card and that can be difficult to determine from a merchant’s location. “The problem of using them for purchases greater than their balances is their dark secret,” Evan Johnson, an administrator in Montgomery County Maryland’s consumer affairs office told the Post.
Credit card companies are rolling out technology that will make it easier for merchants and users to determine the exact remaining balance to prevent the cards from being rejected, but “it is still going to take some time” to have the technology widely in place, Scott Galit, MasterCard’s senior vice president for global prepaid cards told the Post.