Establishes the taxpayer refund choice act and affirms the right of state residents to receive personal income tax refunds by paper check and requires the department to fully describe any debit card or direct deposit program.
Ayes (62): Adams, Addabbo, Alesi, Avella, Ball, Bonacic, Breslin, Carlucci, DeFrancisco, Diaz, Dilan, Duane, Espaillat, Farley, Flanagan, Fuschillo, Gallivan, Gianaris, Golden, Griffo, Grisanti, Hannon, Hassell-Thomps, Huntley, Johnson, Kennedy, Klein, Krueger, Kruger, Lanza, Larkin, LaValle, Libous, Little, Marcellino, Martins, Maziarz, McDonald, Montgomery, Nozzolio, O'Mara, Oppenheimer, Parker, Peralta, Perkins, Ranzenhofer, Ritchie, Rivera, Robach, Saland, Sampson, Savino, Serrano, Seward, Skelos, Smith, Squadron, Stavisky, Stewart-Cousin, Valesky, Young, Zeldin
TITLE OF BILL: An act to amend the tax law, in relation to establishing the taxpayer refund choice act and affirming the right of state residents to receive personal income tax refunds by paper check and requiring the department of taxation and finance to fully describe any debit card or direct deposit program; and providing for the repeal of such provisions upon expiration thereof
PURPOSE: To ensure the right of state residents to continue to receive personal income tax refunds by paper check in addition to any other options that may be offered.
SUMMARY OF PROVISIONS: Adds a new section 3013 to the Tax Law to provide that, notwithstanding the adoption by the Tax Commissioner of any prepaid debit card or direct deposit program for payment of personal income tax refunds, all taxpayers are entitled: (1) to receive their personal income tax refund by paper check; and (2) to opt out of any prepaid debit card or direct deposit program.
The Department shall provide taxpayers with a clear written statement setting forth these rights. If the Department implements a program to pay refunds by prepaid debit card or direct deposit, the income tax forms shall indicate that the taxpayer has the option of receiving his or her refund by various methods, including by personal check, and boxes shall be provided on the income tax forms to allow the person to select the desired option.
In any written notice regarding prepaid debit cards, the Tax Department shall describe all features of such program, such as provisions and fees regarding making withdrawals at ATMs or making purchases at the point of sale.
JUSTIFICATION: Every year millions of New Yorkers overpay their state and local taxes on the wages they receive. These overpaid funds remain the rightful property of the taxpayers. Taxpayers are entitled to the timely refund of their overpayment and should be able to receive their refunds in a manner that is most convenient, understandable and best suited to their individual financial needs.
Currently, the New York State Department of Taxation and Finance plans to transition all personal income tax refund payments to a mandatory direct deposit/prepaid debit card platform. Although prepaid card programs may appear to be attractive due to
potential cost savings to the agency itself, they include fees and costs to taxpayers which may be difficult to understand or keep track of, including ATM usage fees, negative balance fees, bank fees and other charges. Additionally, many taxpayers do not have bank accounts or convenient access to bank branches in their communities. Due to minimum balance requirements, overdraft fees, and other requirements, many low and moderate income consumers are unable to maintain bank accounts, and likely do not have access to direct deposit accounts. Thus, any program that forces New Yorkers to receive tax refunds in a manner that is not suited to their individual circumstances will negatively and disproportionately impact low-and moderate-income citizens and their communities.
It is the existing policy of the State of New York that its citizens have the choice to receive their wages in the manner which best suits their needs. Existing state law requires that private employers, who seek to utilize prepaid debit "payroll" cards for delivery of employee wages, must offer their employees the ability to "opt-out" of such payroll card programs and the right to continue to receive paper checks. Likewise, these same considerations should also be extended to taxpayers who are owed personal income tax refunds.
FISCAL IMPLICATIONS: This legislation should not result in additional costs, since refunds are already being paid via direct deposit and personal checks.
EFFECTIVE DATE: The ninetieth day after it shall have become law, and shall expire and be deemed repealed five years after such effective date.
STATE OF NEW YORK ________________________________________________________________________ 5140--B 2011-2012 Regular Sessions IN SENATE May 3, 2011 ___________Introduced by Sens. FARLEY, DeFRANCISCO, GRIFFO, GRISANTI -- read twice and ordered printed, and when printed to be committed to the Committee on Investigations and Government Operations -- reported favorably from said committee and committed to the Committee on Finance -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the tax law, in relation to establishing the taxpayer refund choice act and affirming the right of state residents to receive personal income tax refunds by paper check and requiring the department of taxation and finance to fully describe any debit card or direct deposit program; and providing for the repeal of such provisions upon expiration thereof THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. This act shall be known and may be cited as the "taxpayer refund choice act". S 2. The tax law is amended by adding a new section 3013 to read as follows: S 3013. METHOD OF PAYMENT OF PERSONAL INCOME TAX REFUNDS; NOTICE. (A) NOTWITHSTANDING THE ADOPTION BY THE COMMISSIONER OF ANY PREPAID DEBIT CARD OR DIRECT DEPOSIT PROGRAM FOR PAYMENT OF PERSONAL INCOME TAX REFUNDS, ALL TAXPAYERS ARE ENTITLED: (1) TO RECEIVE PERSONAL INCOME TAX REFUNDS BY PAPER CHECK; AND (2) TO OPT OUT OF ANY PREPAID DEBIT CARD OR DIRECT DEPOSIT PROGRAM FOR PAYMENT OF TAX REFUNDS. (B) THE DEPARTMENT SHALL PROVIDE TAXPAYERS WITH A CLEAR WRITTEN STATE- MENT SETTING FORTH THE TAXPAYER'S RIGHT: (1) TO RECEIVE TAX REFUND PAYMENTS BY PAPER CHECK; AND (2) TO OPT OUT OF ANY PREPAID DEBIT CARD OR DIRECT DEPOSIT PROGRAM.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD10324-08-1 S. 5140--B 2
(C) IN THE EVENT THAT THE COMMISSIONER ELECTS TO IMPLEMENT A PROGRAM PROVIDING FOR PAYMENT OF PERSONAL INCOME TAX REFUNDS BY PREPAID DEBIT CARD OR DIRECT DEPOSIT TO A DESIGNATED ACCOUNT OF THE TAXPAYER, THE DEPARTMENT SHALL AMEND THE FORMS USED TO FILE PERSONAL INCOME TAX RETURNS TO REFLECT, IN THE AREA DESIGNATED FOR SELECTION OF OPTIONS FOR PROCESSING OF REFUNDS, THAT THE TAXPAYER HAS THE OPTION OF RECEIVING HIS OR HER TAX REFUND BY PERSONAL CHECK AND SHALL PROVIDE A BOX WHICH THE TAXPAYER MAY CHECK TO SELECT THAT OPTION. (D) IN ANY WRITTEN NOTICE REGARDING A PREPAID DEBIT CARD PROGRAM FOR THE PAYMENT OF TAX REFUNDS, THE DEPARTMENT SHALL DESCRIBE TO TAXPAYERS ALL OF THE FEATURES OF THE DEBIT CARD PROGRAM (E.G., WITHDRAWAL AT ANY ATM OR POINT-OF-SALE USE), INCLUDING ANY FEE OR FEES WHICH MAY BE CHARGED TO THE TAXPAYER IN ACCESSING HIS OR HER TAX REFUND. S 3. This act shall take effect on the ninetieth day after it shall have become a law and shall expire and be deemed repealed five years after such effective date.