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Paper is safe at the IRS

By Kay Bell · Bankrate.com
Tuesday, June 15, 2010
Posted: 3 pm ET

A new paperless mandate from the Obama administration has gotten a lot of attention. Seems Uncle Sam will stop sending out paper benefits checks next March.

That means that your Social Security, Railroad Retirement, unemployment insurance and veterans benefits will all go directly into your bank account. If you don't have a bank account, the feds will deliver your payments as plastic via the Treasury Department's Direct Express Debit MasterCard program.

But the one federal agency that almost every American eventually deals with is exempt from the no-paper-check edict. The IRS will continue to issue tax refunds the old fashioned way.

I suspect that, too, will eventually change. This last filing season, the IRS reported that almost three-quarters of folks who got refunds opted to received their tax money as direct deposits. Once the other federal agencies work out the bugs, the tax collector might also move to total electronic payments.

Meanwhile, when it comes to paper payments, the Treasury Inspector General for Tax Administration says the IRS moves much too slowly.  By dawdling instead of clearing taxpayer payments ASAP, the oversight agency says the federal bank account is losing  interest it could be collecting on the money.

The IRS promises to do better.

So if you're mailing the tax man a check instead of using online options to pay your estimated and annual taxes, you'd better make sure you have sufficient funds in your account.

Are you one of the few still getting a "real" tax refund check? Why? What would it take to get you to have your federal refund directly deposited?

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2 Comments
John
June 18, 2010 at 9:31 am

@Bob. The issue is that everyone pays more since you are a dinosaur. And how do you lose control if it is your bank account? Presumably you have the ability to write a check from your bank account.

I 100% support making all payments from the federal government direct deposit. I even do not like the sending of the debit card, which has some cost to the government as well.

Bob
June 16, 2010 at 8:16 am

I rarely get a federal income tax refund, as I usually have to pay more to the feds when I file my return. This year was an exception. And yes, I did get a "real" tax refund check. Why?

Because that's the way I want it! A real, honest-to-goodness, able-to-hold-it-in-my-hand paper check. Something I can touch, deposit or cash any way I want to, where I want to, when I want to.

See, I like to be the one with full control over my money.

The new order mandating direct deposit/debit card payment of federal benefits absolutely stinks. It has nothing to do with Democrats or Republicans; I'm confident that if McCain (or any other Republican) were president, this type of mandate would have been forthcoming from that administration, too.

The option is already in place; 85% of benefit recipients have taken it. How about leaving the remaining 15% alone instead of shoving this down our throats. We've already made a conscious decision NOT to use direct deposit or a debit card for these benefits. Just wait 40 or 50 years---we'll all be dead and gone, and you can have your precious 100% direct deposit program in place......just by attrition.