The Department of Revenue Services, which recently downgraded the role of debit cards, is now seeking funds to maintain old-fashioned paper checks as the default refund option through spring of 2015.
“We felt this is the most conservative approach, the best option we could pursue at this time,” Revenue Services Commissioner Kevin Sullivan said.
The department started hearing complaints in 2012 when it began sending state income tax refunds on debit cards to those filers who hadn’t requested a direct deposit.
But DRS suspended that policy last December after learning that JPMorgan Chase – the bank that administers the debit card program – had suffered a technology breach that compromised personal information of certain refund debit cardholders.
According to DRS, the types of information put at risk included Social Security numbers, account passwords and password confirmation questions. About 2 percent of Connecticut’s refund debit cardholders – about 7,000 filers – were affected.
The breach reportedly occurred between July and September of last year, but the bank hadn’t notified the state until Dec. 3.
Sullivan announced earlier this winter that households filing their 2013 returns – which are due by this April 15 – would again have the option of requesting a refund by paper check, direct deposit, or debit card. But paper check would replace debit card as the default refund delivery option for filers who fail to designate a choice.
And in Gov. Dannel P. Malloy’s new budget proposal – which was sent to lawmakers earlier this month — Sullivan’s department is seeking $141,000 in the fiscal year that begins July 1. This money would enable the paper check default option to remain in place for returns filed in the spring of 2015.
Sullivan said his department continues to explore options for a new vendor to administer its debit card program. If this is resolved quickly, the state could still restore the debit card to default status a year from now.
The department has said that a refund system reliant only on direct deposit and debit cards saves the state nearly $300,000 per year in printing and other costs.