State’s refund debit card plan works: People reject it for direct deposit

Connecticut’s taxman must be a fan of B.F. Skinner .

The State Department of Revenue said 79 percent of tax refunds paid out this year were directly deposited into taxpayers’ accounts. That’s up 24 percent from two years ago, the last time the state issued paper refund checks.

Kevin Sullivan, DRS commissioner, issued a release this week detailing the success of the program, now in its second year. The program drew criticism as it came as a surprise to many taxpayers who were expecting checks. Instead of checks, the DRS contracted with Chase to provide debit cards which must be activated. While fees can be avoided, they can still be assessed on the use of the cards, though most banks can transfer all the money off of the cards into your account after activation.

“Last tax season, Connecticut taxpayers due income tax refunds of less than $5,000 and not choosing direct deposit received debit cards rather than paper checks for the first time.  Said Department of Revenue Services (DRS) Commissioner Kevin Sullivan, ‘It was a bumpy ride last time and we had a lot of explaining to do.  This tax season, with the opportunity to provide a real public information campaign in advance to taxpayers, it is going very smoothly with very, very few complaints.'”

Sullivan noted only 19 percent of refunds have been issued onto cards this year. People who are owed more than $5,000 can still get checks. He touted the cost savings element of the program, which is estimated at about $300,000 annually.

There are critics of the program, as Sullivan addressed in his release.

Added Commissioner Sullivan, “Yes, a few politicians in the State Legislature still don’t seem to get it.  Change is never easy.  But government has an obligation to be more businesslike in reducing costs and modernizing services.  That’s what this is all about, in addition to providing greater security.  With refund debit cards, taxpayers have easy, no-fee choices after simply activating the card.  They can simply cash out at any Chase or other VISA-affiliated bank.  Alternatively, they can use it just like any other debit card to make purchases from VISA-affiliated merchants.”

One reason some lawmakers are skeptical is because, there is evidence that many people never activated the cards last year, something a problem DRS is trying to remedy. After all, that money trapped in plastic isn’t doing the economy any good, though Chase can start whacking the cards for fees after a year.

Commissioner Sullivan also noted DRS will once again do a follow-up mailing to remind taxpayers who may forget to activate and access their income tax refund debit cards.  Said Sullivan, “It’s their money and we want to be sure they get it.”

Note: The mines originally called this a Pavlovian tax experiment. After arguing with our colleague J. Burgeson, the man who made Whitehead fly, we’ve decided to amend the lead. Burgie argued the Pavlovian reference is more apt to be taken as a reference for salivation. We argued that Pavlov was paving the way for behavioral modification using positive reinforcement. But we conceded, perhaps Skinner would be a better reference, given his use of both negative and positive stimuli to get a result.

Rob Varnon