The U.S. Department of the Treasury last week launched a program that offers taxpayers a financial account for the electronic delivery of their federal tax refunds. It says the account card offers money-saving conveniences and consumer protection features for taxpayers with limited or no access to traditional banking services.
Originally announced in September, the Treasury this week is mailing letters to 600,000 low- and moderate-income individuals, asking them to consider activating a MyAccountCard Visa Prepaid Debit Card in time to have their 2010 federal tax refund direct-deposited to the card.
“This pilot program will provide low- and moderate-income Americans with a low-cost option for faster delivery of their federal tax refund,” said Deputy Secretary of the Treasury Neal Wolin. “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.”
The Treasury also began a companion pilot to encourage current and potential payroll card users to direct-deposit their 2010 federal tax refund onto existing payroll cards. Working with ADP, a provider of payroll services, the Treasury is promoting the safety, ease, and convenience of direct deposit onto payroll cards through tax season communications, including materials distributed with pay statements.
The letters mailed to taxpayers about MyAccountCard contain information about the card’s features, including free services and the fee structure for optional services. Many of the features, including free point-of-sale transactions, free online bill pay, free ATM cash withdrawals at more than 15,000 ATM machines, and free cash back at participating retail stores, will help cardholders limit the costs of using the card, according to the Treasury. The information also explains how to sign up, and how to use the card to receive a federal tax refund and conduct everyday financial transactions.
As part of the pilot, the Treasury will randomly offer several variations of MyAccountCard to evaluate which product features, fee structures, and marketing messages generate the greatest positive response from taxpayers. The results of the pilot will help determine the benefits and feasibility of a card account as an integrated part of the tax filing and refund process.
"This is a relatively low-fee card compared with others on the market", Jean Ann Fox of the Consumer Federation of America, told The Washington Post.
Fox discourages taxpayers from using refund anticipation loans because of their high costs, and is upbeat about the Treasury's pilot program. "This is a better bet than paying about $30 for a refund anticipation check", Fox said.
The Visa-branded MyAccountCard will be issued by Provo, Utah-based Bonneville Bank, acting as the Treasury’s financial agent and pursuant to a license from Visa U.S.A. Inc., with additional services provided by Bonneville Bank through its program manager, Green Dot Corporation, a prepaid financial services company.