The Treasury Department said it would launch a new pilot program next tax season for people without bank accounts, directly depositing their tax refunds in special accounts that they will be able to access with debit cards.

The pilot program will be aimed at low- and moderate-income individuals, who will be asked to sign up for new accounts with debit card access at tax time. The program will also test offering accounts that can be used year-round in the future to deposit other sources of income, store money safely, make purchases, pay bills, withdraw cash and build savings.

“Far too often, unbanked and under-banked Americans are forced to turn to high-cost alternative financial products — such as check-cashing and other services — that take a big bite out of the savings of those who can least afford it,” said Assistant Treasury Secretary for Financial Institutions Michael S. Barr in a statement. “For many individuals, a tax refund is the single largest payment that they will receive each year. That's why tax season is a great opportunity to deliver safe, low-cost financial products to the unbanked and under-banked that will help those Americans build stronger foundations for their financial futures.”

The pilot is expected to launch during next year’s tax return filing season. The Treasury will reach out to eligible taxpayers in early 2011 through two methods: direct mail and payroll outreach. The Treasury will mail information about how to sign up for the new accounts to low- and moderate-income individuals who have received paper check refunds in prior years or who otherwise have not provided bank account information to the Treasury.

The Treasury will also partner with the private sector to insert offers to enroll in the pilot program in the paychecks and paystubs of select individuals who are not currently using direct deposit to receive their tax refunds.

The offers to enroll in the pilot will include instructions on how to use the account. The Treasury will evaluate the results of the pilot to make future decisions about the viability, structure and timing of offering similar accounts as an integrated part of the tax filing and refund process.

The Treasury has been using Direct Express debit cards from MasterCard for over two years to direct-deposit Social Security and Supplemental Security Income benefits for those without bank accounts.


According to the Federal Deposit Insurance Corporation’s 2009 National Survey of Unbanked and Underbanked Households, there are an estimated 9 million households without bank accounts. Another 21 million households are under-banked, meaning that they have a bank account, but these accounts do not fully meet their needs, and they still rely on high-cost check-cashing services or other costly financial service providers.

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