In an effort to encourage savings and more banking, the Internal Revenue Service is creating a program to allow taxpayers who use direct deposit to divide their refunds among as many as three financial accounts.

The new Form 8888 will give taxpayers a choice of selecting one, two or three accounts such as checking, savings and retirement account. Taxpayers who want all their refund deposited directly into one account can still use the appropriate line on the Form 1040 series.

"Direct deposit is growing rapidly and is now used by over half of all refund filers," said IRS Commissioner Mark W. Everson, in a statement. "

Exact details of the split-refund program, including a draft of Form 8888, are still being decided. The IRS intends to meet with a number of consumer, tax professional and software associations to seek suggestions on operational and promotional details. The program will take effect in January 2007.

Direct deposit of refunds was first offered in 1987. Last year, the agency issued 100 million refunds (from 133 million tax returns), amounting to $217.6 billion. Of those refunds, 52.7 million -- amounting to $134.2 billion -- were deposited directly into bank accounts.

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