The Treasury Department has announced that it will be sending letters out to 600,000 low to middle class taxpayers next week. The notice will be to offer them a change to sign up for a debit card that they can have their tax refunds deposited into. This is a continuation of a government initiative to stop sending checks and direct deposit government payments. In June, I wrote about this program in the post, Better Than A Check. At that time, the program was limited to Social Security and VA Benefits. Tax refunds were down the road. It appears this was changed. In a Press release, the IRS announced the tax refund program. The problem is that they are too late for this program to be effective this year.
Let's look at the time table. The letters go out next week. I'm assuming the usual Friday mailing (the 21st). The taxpayer gets the letter, fills it out, and sends it right back. The processing company won't get it much before the 31st. Then there is the time to process the application, create the card and mail it back. I'll estimate two weeks. So, we're talking the card in the taxpayer's hands about the middle of February. By which time most of the target group will have already filed their returns, received their refunds, and, for too many of them, spent it all. This should have been started a month ago.
This isn't the first time the IRS hasn't thought about timing for this taxpayer group. How many times have they offered a webinar or Tax Talk on EIC in February? For as long as I have prepared taxes, I have been able to say that I do half (number wise) of my returns by February 15th. That's a third of the tax season. After February 15th, the returns get more complex and the EIC almost disappeared. I bet most practitioners with a similar client base will say the same thing. This could be a good program, but the IRS needs to study the results knowing that they missed too many of their potential taxpayers. And they need to start planning earlier next year and get the letters out in Early December.
A special thanks to Kay Bell for the heads up. Don't Mess With Taxes
My post about debit cards for Social Security and VA Benefits. Better than a Check