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Open Letter to the Virginia House of Delegates: Virginians Deserve Tax Refund Options

February 6, 2014

Dear Delegate:

On behalf of National Taxpayers Union’s (NTU’s) 362,000 members nationwide and our 9,300 members in Virginia, I urge you to vote NO on SB 27 and HB 440 and oppose the related amendments to the budget. These proposals will strip taxpayers of an important refund delivery method: the prepaid debit card, eliminating a useful option for Virginians to receive their own money in the form they find most convenient, and deliberately sidestepping an important opportunity to save the Commonwealth money by reducing the use of paper check refunds over time.

Without the option to receive state income tax refunds on prepaid debit card, Virginia taxpayers will be forced to select an alternative that may not be best-suited to their individual needs. While some have raised concerns over the cards’ fees, these costs are easily avoidable. In fact, the cards can be used in place of a check, in a bank, where an individual can receive his or her full tax refund. They can also be used at any point-of-sale, like a debit card, without charge. For unbanked Virginians, this could be preferable to cashing a paper check, which can be expensive.

Equally important, the inclusion of the prepaid debit card as a refund delivery option is fiscally responsible, since it could help to achieve cost savings by decreasing the number of paper-based refund checks.  In fact, electronic payment cards (EPCs) have already saved millions of dollars in the Commonwealth. Since 2005, the state’s use of EPCs has spread from employee payroll benefits to unemployment insurance, child support, and Temporary Assistance for Needy Families. The results are compelling for taxpayers and fiscally conservative lawmakers alike, as EPC initiatives have reduced the number of paper checks issued from 10 million to 3 million annually. One of these initiatives, the Virginia Debit MasterCard program, has saved the Commonwealth more than $2.5 million per year in direct costs for producing paper checks. Other governments have reported similar savings, making the proposals before the House of Delegates all the less defensible.

Instead of stripping away the option to receive income tax refunds on prepaid debit cards, lawmakers should strive to save taxpayer dollars and increase consumer choice. Virginia has already emerged as a leader in replacing costly paper-check systems with electronic payments, and income tax refunds should be no different. Prepaid debit cards would allow unbanked taxpayers to keep their entire tax refund, which is especially important in this sluggish economic climate. I urge you to vote NO on SB 27 and HB 440 and oppose related amendments to the state budget.


Lee Schalk
State Government Affairs Manager