Tax Refunds on Debit Cards

February 14, 2012

On January 31st, the Malloy Administration and the Department of Revenue Services caught the public and state legislators by surprise when they announced that, beginning this year, many state income tax refunds will be issued on debit cards instead of paper checks.  The first cards were issued earlier this month and several taxpayers have contacted our office with questions about the new policy. 

Here are some quick facts:

  • All state income tax refunds totaling less than $10,000 will be issued on debit cards, unless the taxpayer requests a direct deposit on their income tax return. Refunds totaling $10,000 or more will continue to be provided by check.
  • The new cards will include activation instructions in both English and Spanish.

  • The cards can be used to make cash withdrawals at ATM machines, or to make purchases wherever credit, or debit cards are accepted.

  • The cards can be brought to your bank teller for a cash advance that can be deposited directly into your personal checking or savings account.

  • Card recipients can set up a Chase online account and transfer their debit card balance to a non-Chase account for a $0.75 fee. Other bank fees may apply.

  • The maximum daily ATM withdrawal is $800.

  • The first three transactions made at any ATM machine and all transactions made at Chase and People’s United ATM machines are free.

  • After three free transactions, withdrawals made at ATMs other than Chase and People’s United will incur $1.50 fee.  Other bank fees may apply.

  • After 12 consecutive months of card inactivity, Chase will initiate a $1.00 charge per month.

  • If the card is not activated within 12 months, the account will be closed and the balance of your refund will be returned to the DRS.

In addition to the quick facts above, a list of frequently asked questions can be found on the DRS website: http://www.ct.gov/DRS/cwp/view.asp?a=1462&Q=491676.

While I have opposed this policy and its associated fees from the offset, DRS believes it is a safer and more efficient way to handle refunds.  I hope it is.

To be sure, as with any new policy, the FAQ may not answer all of your questions, in which case I encourage you to call DRS at (860) 297 4845 or contact my office directly, so that we might help to make the transition as easy as possible.