News Column

Virginia Eliminates Paper Checks for Income Tax Refunds

January 16, 2013

Carol Hazard

If you are one of millions of people in Virginia who get a state tax refund, you no longer will receive a paper check for it. Beginning this year, taxpayers can get their refund two ways -- by direct deposit or a state refund debit card.

The change will affect a lot of people, since the state issued 1.2 million paper checks last year.

In all, 44 percent of state tax refunds were sent last year as checks and 56 percent by direct deposit.

Joel Davison, spokesman for the Virginia Department of Taxation, said eliminating paper checks will save the state an estimated $200,000 a year. Virginia is one of about eight states offering a debit card alternative.

"The decision was made here to go ahead and do it and save the state some money," he said.

The General Assembly decided last year to forgo paper checks, and the Department of Taxation is trying to get the word out to let taxpayers know, Davison said.

The state has offered direct deposit for state tax refunds for several years, but this is the first year for debit cards.

The fastest way to get a refund is by having it deposited directly into a bank account, especially if the return is filed online.

For those choosing a debit card, the same vendor -- a division of Xerox Corp. -- that handles debit cards for unemployment benefits and food stamps will handle the debit cards for state tax refunds, Davison said.

Taxpayers can get the full amount in cash if they go to banks that handle MasterCard accounts. They can transfer funds from the card to a bank or credit union for free, or they can use it like any debit card to make purchases in stores or online.

Once all the money is used or transferred, the card should be discarded, as it will not be reloaded. New debit cards will be sent out each year, Davison said.

For people filing joint returns, two cards tied to the same account will be mailed out. The Department of Taxation cannot split a refund amount into separate accounts.

Davison said it makes sense to go paperless. He said it takes more people and steps to handle paper than direct deposits or electronic debit cards.

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Source: (c) 2013 the Richmond Times-Dispatch (Richmond, Va.) Distributed by MCT Information Services

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