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Tax Department Suspends Debit Card Refund Program

by Hugh McQuaid | Dec 16, 2013 4:38pm
(5) Comments | Commenting has expired

The state has suspended its debit card tax refund program in response to a security breach at its contractor, JP Morgan Chase, Revenue Services Commissioner Kevin Sullivan announced Monday.

An attack on JP Morgan’s website between July and September affected customers all over the country. In Connecticut, the attack impacted residents who have prepaid debit cards that the state uses in lieu of checks to administer payments like tax refunds, child support, and unemployment benefits.

The attack potentially exposed the personal information of about 14,000 Connecticut card holders, including holders of about 7,000 cards issued by the Department of Revenue Services.

In response, Sullivan said Monday his department was suspending the debit card program for tax refunds and sending thousands of residents their refunds via paper checks for the rest of the year.

In 2014, the Revenue Services Department will give taxpayers the choice to receive their refunds either by paper checks, direct deposit, or a debit card, according to the statement. He said the state also was looking to reopen the debit card contract as soon as possible to seek new competitive bids from vendors.

Sullivan, who announced the debit card tax returns almost two years ago, defended the concept Monday.

“The use of debit cards for many state purposes, including tax refunds, still makes business sense and costs less. However, at DRS, we owe it to the public to seek a new contract that assures security and far greater responsiveness,” he said.

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(5) Comments

posted by: DirtyJobsGUy | December 16, 2013  6:15pm

I never understood the logic for this.  A paper check has got to be less expensive for the state (certainly not exposing the state to these hazards).

I guess this is all for the enhanced CT Earned Income Tax Credit.  We have to assume that non-taxpayers do not have checking accounts so we raise the states costs a little more.  Must every state function cater to the non-taxpayer?

posted by: robn | December 17, 2013  10:01am

DJG,

You’re not asking the right questions. Ask yourself why JPM wants CT to park a billion dollars of refunds in JPM debit cards? Then ask yourself why can’t CT profit off of the parked cash in the same manner?

posted by: JohnQPublic | December 17, 2013  10:37am

Paper is a lot more expensive than debit cards because the banks don’t charge for processing or mailing.  They make their money from the transactions.  For the state, this is a lot less expensive than printing and mailing the checks.

posted by: lkulmann | December 18, 2013  8:14am

Well what if this ‘hack’ exposed some money transactions that would expose some funny money business by the State? Are we protecting the residents or are we covering up dirty business? I say dirty business. We don’t protect the Entitlement population in our State. In fact we make it a living hell for this population in CT. What if the source of dirty money transactions was caught with their hand in the cookie jar, does she go to jail?

posted by: robn | December 18, 2013  10:28am

For the brief time that citizens’ refund money is unretrieved, its not just sitting in limbo doing nothing. JPM is using the cash for trades and making a ton of money. CT should share in that profit also.