BILL NUMBER:S4837

TITLE OF BILL:
An act
to amend the tax law, in relation to affirming the right of state
residents to receive personal income tax refunds in the manner in which
they choose and requiring the department of taxation and finance to
fully describe any debit card or direct deposit program

PURPOSE:
To ensure the right of state residents to receive personal
income tax refunds in the manner in which they choose and requiring
the department of taxation and finance to fully describe any debit
card or direct deposit program.

SUMMARY OF PROVISIONS:
Amends Article 41 of the New York State Tax Law
by adding a new section 3013 to provide that, in connection with
payment by the Department of Taxation and Finance ("Department") of
personal income tax refunds, and 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 choose the means of payment of personal income tax refunds,
including the right to receive a paper check; and (2) to opt out of
any prepaid debit card or direct deposit program for payment of tax
refunds.
              

The bill also requires that the Department amend the forms used to
file personal income tax returns to reflect, in the area designated
the selection of options for processing refunds, so that taxpayers
have the option of receiving his or her refund by various methods,
including by personal check and that a box be provided for each
method so that the taxpayer call check to designate the method by
which he or she wishes to receive the refund.

Similarly, the Department is also required to provide written notice
regarding any prepaid debit card or direct deposit program for the
payment of tax refunds, and must describe in writing all the features
of any direct deposit or debit card program (e.g., withdrawal at any
ATM or point of sale use), including any fee{s) which may be charged
to the taxpayer in accessing his or her tax refund.

JUSTIFICATION:
Every year millions of New Yorkers overpay New York
State and local taxes on wages they receive. Notwithstanding
overpayment of taxes to the State, these overpaid funds remain the
rightful property of the taxpayers. Taxpayers are entitled to the
timely refund of their overpayment, and should 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
("DTF") is in the process of transitioning 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 cost savings, 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 racial and ethnic minority groups and
low and moderate-income citizens.

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.

When enacted into law, this bill will preserve an important personal
right of choice to which every citizen consumer should always be
entitled and good public policy which should be retained.

PRIOR LEGISLATIVE HISTORY:

Same as A.6997 (Perry)

FISCAL IMPLICATIONS:

Undetermined.

EFFECTIVE DATE:

Ninetieth day after becoming law.