Ways & Means members demand data on failed, costly debit card tax refund test

June 26, 2012

The Treasury Department is promising two Ways and Means members that it will get them answers about the failed plan to issue tax refunds on prepaid debit cards soon.

We shall see.

Fast start, but…: The tax refunds via debit cards plan was launched with much fanfare in January 2011 as a way to help taxpayers who don't have bank accounts.

With a prepaid debit card instead of a paper tax refund check, argued Treasury, recipients wouldn't be at the mercy of check cashing companies. Even consumer advocates lauded the pilot program.

Treasury prepaid tax refund debit card

Sending refunds via plastic was a logical move by the Internal Revenue Service, which has for years been getting tax payments electronically. Plus, the debit card transactions would cost less for the IRS to administer.

But Rep. Dave Camp (R-Mich.), chair of the Ways and Means Committee, and Rep. Charles Boustany (R-La.), head of the committee's Oversight Subcommittee, have been skeptical about the program from the get-go.

Apparently their reservations were right.

Unfortunately for Uncle Sam, taxpayers weren't impressed with new refund option. Most of the lower- and middle-income folks who were offered the refund debit cards said no thanks.

The Treasury Inspector General for Tax Administration, or TIGTA, noted in a report on last year's filing season trends that as of April 30, 2011, only 239 taxpayers elected to participate.

Still waiting for word: The Treasury Department, however, never issued an official announcement that the plan was dead.

Neither did it answer my calls over the months for final word on the fate of the refund debit cards.

Camp and Boustany apparently also got the runaround. (I feel a little better knowing they, too, were ignored!) So the duo last week sent another letter seeking an explanation of what went wrong.

In their June 21 letter to Treasury Secretary Timothy Geithner, the tax-writing lawmakers noted that only 2,000 of the 808,000 eligible taxpayers elected to participate in the debit card refund pilot project. (Looks like they did get at least a bit of updated data.)

But that number is still appallingly low. And expensive.

"With the program estimated to cost $1.5 million, this means taxpayers paid $750 for each pilot program participant," wrote the Ways and Means members.

Treasury hired the Urban Institute, a nonpartisan economic and social policy research group, to conduct a study of the refund card test program. The report was turned in to Treasury late last year, where it's been "undergoing internal review."

"A delay of more than half a year in releasing a report paid for with taxpayers dollars is unacceptable," wrote Camp and Boustany. They've demanded that Treasury "come clean" about the pilot program and send them a copy of the findings by Friday, June 29.

Tax Notes Today reports that upon getting the second letter, Treasury said it expects to issue a report on the now-defunct program's problems "shortly."

Here's hoping that does indeed happen and that when the Congressmen get the information, they'll be more forthcoming than Treasury has been.

You also might find these items of interest:

Share:

The More Tax Posts tab at the top of this page will take you to, well, more tax posts. You also can search below for a tax topic. 

Latest Posts
The latest Dirty Dozen tax scam list is familiar because too many are still falling for the schemes

March 5, 2026

Tax filing season is also peak time for tax scams. Be on the lookout for…

Read More
Hello Tax Season 2026

Happy New Tax Year! Are you ready to file your 2025 tax return? I know, too early to ask. But Tax Day 2026 will be here before we realize it. The Internal Revenue Service deadline to file and pay any tax we owe is the regular April 15 date this year. It’s also Tax Day for most of the states that collect income taxes from their residents, which is most of the states! If that seems too far away right now, don’t worry. As is the case every tax season, the ol’ blog’s tips and other tax reminders should help all of us meet our state and federal responsibilities. Procrastinators also will want to keep an eye on the countdown clock just below. It tracks how much time we have until April’s Tax Day, just in case we put off our annual tax task until the absolutely final hours and decide we need to instead get an extension request into the IRS by that date. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

Comments
Leave the first comment