More states to offer prepaid tax refund option

The arrival of 2012 brings a new prepaid debit card option for tax refund recipients in several states. Following New York state's early December 2011 announcement of its plan to add prepaid cards as a refund delivery option in 2012, alongside direct deposit and paper checks, South Carolina and now Louisiana have jumped on board.

The South Carolina Department of Revenue will issue an open-loop, Visa Inc.-branded prepaid card through Bank of America Corp. Among its chief characteristics, the card program is expected to save South Carolina overhead costs associated with issuing refunds on paper checks. The state office said the main benefits of the card for South Carolinians are threefold:

• Frees cardholders to purchase goods and services wherever Visa debit cards are accepted
• Eliminates the need for unbanked tax refund recipients to utilize check cashing services
• Achieves greater security for recipients over carrying tax refunds in cash

Cards for Cajuns

In Louisiana, the MyRefund Card is also Visa-branded and will be issued by JPMorgan Chase & Co. Unlike the New York State tax refund program, where taxpayers will be able to check a box on tax forms in order to receive refunds on MasterCard Worldwide-branded prepaid cards, the Louisiana tax refund card will be automatically mailed to taxpayers who do not opt for refunds to be direct deposited to bank accounts.

Byron Henderson, Press Secretary for the Louisiana Department of Revenue, said the program falls in line with the government-wide mandate by Louisiana Gov. Bobby Jindal to more efficiently use state resources. The MyRefund program is expected to save the state government agency $500,000 annually that would have been allocated for the printing and distribution of tax refunds via paper checks, Henderson added.

Forty-seven percent of Louisianians have tax refunds direct deposited, according to Henderson; the other 53 percent receive paper checks.

"We would like to encourage as many people as possible to file electronically with their tax returns and to select direct deposit, because that's obviously the quickest and most efficient way of receiving your refund," he said. "But those who for whatever reason do not want direct deposit, then we are making the MyRefund Card available to them."

Henderson noted that the Louisiana Department of Children and Family Services and the Louisiana Workforce Commission already utilize prepaid card programs for the distribution of state government benefits.

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