State changes refund policy

37 taxpayers receive $30,000 debit cards

Three dozen Louisiana taxpayers got a big surprise when they received state income tax refunds this month from the Louisiana Department of Revenue.

Instead of writing the 37 people checks, the agency sent prepaid debit cards with balances of $30,000 or more.

“That’s a whole lot of trips to the grocery store,” quipped state Rep. Joel Robideaux, a certified public accountant and chairman of one of the Louisiana House’s money committees.

The amounts were correct, but the agency is revamping its policy to prevent any further release of cards with more than four-digit balances, Revenue department spokesman Byron Henderson said Wednesday.

Income tax filers with refunds topping $6,999 now will get checks instead of prepaid debit cards if they don’t request an electronic deposit into their bank account, he said.

“One of the original goals of the program was to allow card recipients to withdraw the full amount of their refunds in cash if they chose to do so … Federal banking regulations limit the amount (banks) can dispense in cash at one time” to cardholders, Henderson said of the reason for the change.

Henderson said less than 1 percent of refunds this year are expected to exceed $7,000.

The agency announced in December that it was shifting from paper checks to prepaid debit cards, which are called MyRefund cards. Filers also can have refunds deposited directly into their bank accounts.

“Security and convenience are the primary benefits of the MyRefund card,” Secretary of Revenue Cynthia Bridges said at the time.

With the exception of those with big refunds, income filers due state refunds will receive a debit card in the mail unless they give an account number for a deposit.

The cards can be used to make purchases or to withdraw money at ATMs and banks with a Visa logo.

The agency hopes to save money on the printing and distribution of checks.

Henderson said the program is going well, citing:

• 40,724 MyRefund accounts created
• Almost 14,000 cards activated
• More than 13,500 card transactions taking place, totaling $1.5 million

The cards are inactive when they arrive in the mail and must be activated in a process that includes selecting a PIN number. The cards are valid for one year. After that, any balances are reported to the state Treasurer’s Office as unclaimed property.

Baton Rouge certified public accountant Donald Deville said more than half of his clients get paper checks rather than opting to have refunds deposited in bank accounts.

He said he is concerned about the new cards.

“I’m upset with it. It’s another tool they’re using. People are going to lose that card,” Deville said.

Robideaux, R-Lafayette, said the cards will create headaches for people unfamiliar with using them.

“Some of the consumers are going to have problems,” he said. “Change always comes with some hiccups.”

Senate President John Alario, who prepares tax returns for a living, said the cards are a good thing if they save the state money.

Alario, R-Westwego, said the state could have explained the program better to residents.

“They could’ve done a better job of informing the public so it wasn’t such a shock to them,” he said.

Henderson said the debit cards with large balances that were sent this month involved refunds from previous years and, in some cases, multiple years.

Chase is handling the cards without receiving any money from the revenue department for doing so, Henderson said.

However, the bank is charging some fees on the cards.

The fees include:

• A $1.50 cash withdrawal fee at non-Chase ATMS after an initial free withdrawal.
• A 75 cent fee for transferring debit card balances to a non-Chase bank account.
• A 25 cent fee for transactions denied for insufficient funds after an initial free one.
• $15 for expedited card replacements.
• $1.50 per month for inactive accounts not used after a year.