1.2 million Virginians will no longer be getting their state tax refund by check, the Virginia General Assembly decided with the recently passed 2012-2014 Appropriations Act.
Instead, a prepaid debit card containing the total refund amount will be sent to Virginians who received their refund by check and do not want direct deposit.
On Jan. 15, it was announced by the Virginia Department of Taxation that checks were eliminated as a refund option to save $200,000 in annual printing and mailing costs for the Commonwealth of Virginia.
Commissioners of the Revenue in the Northern Neck shared their concerns over the new measures enacted by the state.
“I know a lot of people like to see checks…especially elderly people,” said Jennifer Delano, Richmond County’s Commissioner of the Revenue. “I don’t know how they handle debit cards.”
Thomas Blackwell, commissioner of revenue for Essex County, agreed.
“I’m always most concerned about our elderly and how it’s going to affect them,” he noted. “They’re always the folks I think about when we have any kind of change.”
Delano said that citizens will have to activate their debit cards online or by phone.
Blackwell added that the use of personal information in activating the cards could pose problems.
“What if [that information] falls in the wrong hands?” Blackwell asked.
But Joel Davison, public relations manager for the Virginia Department of Taxation, countered that the process of using a debit card for the tax refund was safer than receiving a check.
“There’s always that chance of a check not making it to you, or somebody trying to forge it,” Davison said, adding that although his department did not know of related cases, the possibility of it occurring exists.
“You’re not going to have that with a debit card because someone just can’t take it from your mailbox and activate it…they have to know all [your personal] information,” he continued.
Delano also pointed out the quicker delivery of funds through the debit card option.
“[The taxation department] always used to put the check refund to the backburner and do the direct deposits first,” she said. “I’m hoping with the debit cards that they process those a little quicker.”
Davison said the changeover from checks to cards fell in line with a series of transitions for state and federal programs.
“Prepaid debit cards are used for unemployment benefits, food stamps, things like that,” Davison said.
“Several other states are using debit cards for tax refunds either as either a requirement or an option,” he continued.
The new Virginia Tax Redund debit card, pictured above, will replace the taxpayer’s option to receive state tax returns by check. Xerox will manage the card program.
Blackwell also noted his concern for his constituents who didn’t have bank accounts. However, Davison said that accounts would be created for the debit card users in the Comcerica banking system.
“That account will be open as long as the funds are on the card,” he added.
The public relations manager also said that citizens would receive a debit card each sequential year until they decided to switch to direct deposit.
“Last year about 56 percent of taxpayers chose direct deposit with 44 percent choosing checks,” Davison noted, adding that the trend has been going toward direct deposit.
Blackwell said he anticipates his office becoming a focal point for many questions from locals about the new tax law.
“I just think that some folks who aren’t comfortable or familiar with a debit card will not understand it at first, ” he said. “Folks should always feel that they can contact their local commissioner of the revenue or treasurer [about the policy].”
Davison acknowledged that the change would be “an adjustment” for the 1.2 million taxpayers who received their refunds in the form of checks.
“There will probably be some people who won’t be happy with it, but there are some good things about it,” he said.
“The first year is always the worst,” said the commissioner. “Any time you have a change it gets a little better each year, and about three years from now nobody will think much of it…I hope.”
The changes will not affect the amount returned to taxpayers.
Xerox, which currently administers the debit card programs for unemployment benefits and state food assistance, will oversee the new option for state tax refunds.