Many Louisiana taxpayers have received tax refunds on prepaid cards rather than checks. While this may be more convenient for many recipients, when the refunds climb too high prepaid cards may not be the best choice. The state sent 37 taxpayers cards with over $30,000, according to local press reports. The problem is that spending those refunds can be difficult, and recipients cannot, by federal regulation, withdraw those funds in cash.
The amounts were correct, but the agency is revamping its policy to prevent any further release of cards with more than four-digit balances, Revenue department spokesman Byron Henderson said Wednesday.
Income tax filers with refunds topping $6,999 now will get checks instead of prepaid debit cards if they don’t request an electronic deposit into their bank account, he said.
While government disbursements like tax refunds can benefit from prepaid distribution, the Louisiana program shows that prepaid programs need to be tailored to the needs of the recipients and that prepaid needs to be considered as part of a larger payments program.
