Tax refund cards were very popular during the 2010 tax season. Companies such as H&R Block, Green Dot (NYSE: GDOT) and others enjoyed a substantial lift in prepaid cards issued during the tax refund period, as underbanked taxpayers used prepaid debit cards to receive direct deposit of their tax refunds. This week, the U.S. Treasury announced a pilot program for 2011 in which the Treasury will encourage use of these tax refund cards.
In a press announcement dated September 2, 2010, the U.S. Department of the Treasury announced that it will launch a new pilot program to help capitalize on tax refund season as an opportunity to provide unbanked and underbanked Americans with access to safe, low-cost financial accounts. This pilot will deliver targeted offers to certain low and moderate income individuals to sign up for new accounts with debit card access at tax time in order to receive their refunds through direct deposit. It will also test offering accounts that can be used year-round in the future to deposit other sources of income, store money safely, make purchases, pay bills, withdraw cash, and build savings.
The pilot program will start during the 2011 tax return filing season. The Treasury Department will contact eligible taxpayers by direct mail and by a “payroll outreach” program where the Treasury will team up with companies to insert offers in paychecks and paystubs of people who do not currently use direct deposit for their paychecks.
Read the Treasury Department press release here.