IRS will still mail tax-return checks

By Al Everson
Beacon staff writer

posted Feb 6, 2013 - 6:57:12am

“The check’s in the mail” is destined to become an obsolete assurance very soon.

After several years of talking about it, the U.S. government is quickly moving to eliminate — or drastically reduce — sending paper checks to individuals and businesses.

The push is on to put practically everyone eligible for federal payments onto the direct-deposit rolls.

“The Department of the Treasury is making a conversion to electronic transfer,” said Belinda Carver, director of the DeLand office of the U.S. Social Security Administration. “It does apply to us.”

Effective March 1, virtually all payments for federal benefits will be made via electronic deposits into recipients’ bank accounts. Printing and mailing paper checks is ending — except in rare cases — and the deadline for those receiving federal payments to act is fast approaching.

“When Congress passed the bill in 2010, 2013 seemed like a long way away. Now it doesn’t seem like a long way away,” said Brad Benson, of the U.S. Treasury’s Financial Management Service. “The idea is to get rid of paper checks. It’s a big savings to the government, over $1 billion.”

Regardless of the time pressure upon people without bank accounts to set them up, at least one local banker says he has noticed no surge in new customers.

“I haven’t seen any uptick based on that issue,” said David Bridgeman, president of Pinnacle Bank in Orange City.

Benson said the Treasury already makes 95 percent of its benefits payments to individuals by direct deposit. He conceded there are some people who don’t have bank accounts, either because they cannot properly manage them or because they simply do not wish to deal with banks.

“I can’t make people trust banks,” Benson said.

Bridgeman agrees.

“A lot of people are suspicious of banks, because they don’t trust the government,” he told The Beacon.

Some of those are older Americans who are children of the Great Depression and either remember firsthand or heard their parents talk about the bank failures. Before the establishment of the Federal Deposit Insurance Corp., the collapse of a bank was a disaster that cost families their savings or forced them to wait to recover their dollars.

For those who don’t wish to open a bank account to receive their monthly benefits payments — including veterans benefits, military and civil-service retirement, Railroad Retirement, etc. — the Treasury Department has set up an alternative.

“The other option is a prepaid debit card that we send out,” Benson said. “We built it for people who are unbanked. Nobody’s payment will be interrupted.”

“The card has insurance on it. It’s got the same FDIC insurance as a bank must have,” he continued. “The card is sent by mail. They verify that you are you. You don’t have to visit a bank.”

The card also has a limit equal to the highest dollar of benefits of the individual recipient. One of the downsides of the debit card, Benson said, is the holder will be subject to the fees for using an automated teller machine (ATM), and those charges “could add up quickly.”

“I worry about people paying exorbitant fees,” he said.

Benson said the Treasury debit cards will enable the homeless to collect their share of federal benefits.

“They can get it by having it mailed to a general-delivery address,” he said.

The Department of the Treasury has set up a website to assist in the transition. For more information, go to www.godirect.org.

The U.S. government’s move away from paper checks does not apply to income-tax refunds this year, according to Benson.

“IRS [Internal Revenue Service] is a different animal,” he said. “They’re not part of this.”

— al@beacononlinenews.com

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