The Internal Revenue Service and the Treasury Department are beginning to send nearly 4 million economic impact payments by prepaid debit card, instead of by paper check or direct deposit.
The IRS had trouble with some direct deposits because it was relying on information from taxpayers’ 2018 and 2019 tax returns, and in some cases the money went to temporary bank accounts set up by tax prep chains. Paper checks are starting to go out, but they take longer. The prepaid debit cards promise to provide more convenience, but if they get lost in the mail, that could pose problems as well for people eagerly awaiting their economic impact payments.
Karen P. Schaeffer is the managing member and co-founder of Schaeffer Financial, a financial consulting firm in suburban Washington, D.C.
She has been advising clients for over 40 years and has developed a diverse client base including professional women, Foreign Service Officers, foreign nationals and federal government employees. In addition to her financial planning practice, she is a popular lecturer and seminar leader. She has spoken on global financial planning issues at many international conferences and has represented the CFP Board at Financial Planning Standards Board meetings around the world. Organizations that have drawn on her expertise include the World Bank, the Department of the Treasury, the International Monetary Fund, the Federal Deposit Insurance Corp. and the Department of State.
Nancy A. Kistner, CFP, is a managing director, wealth strategy executive and head of business strategy for the Bank of America Private Bank Wealth Strategy Group.
She also serves as the wealth strategy division executive for New York and the West Division for the Private Bank headquartered in New York. In addition to leading business strategy for the Wealth Strategy Group in the Private Bank, she directs the efforts of wealth strategists throughout New York City and the West Division, encompassing twelve markets across eight states including Arizona, California, Colorado, Nevada, New York, Oregon, Utah and Washington. She also serves as an executive leader of the Private Bank Onboarding Council, Whole Family Engagement Council and Advisor/Analyst Development Programs.
Justin Peterson is a Deadly Weapons Protection Underwriter at Beazley. He has been with Beazley since 2022.
The Treasury said recipients can use the so-called EIP Cards to make purchases, get cash from in-network ATMs, and transfer funds to their personal bank account without incurring any fees. They can also check their card balance online, by mobile app, or by phone without incurring fees. The EIP Card can be used online, at ATMs, or at any retail location where Visa is accepted. The free, prepaid card comes with the kinds of consumer protections available to traditional bank account owners, including safeguards against fraud, loss and other problems.
“Treasury and the IRS have been working with unprecedented speed to issue Economic Impact Payments to American families,” said Treasury Secretary Steven T. Mnuchin in a statement Monday. “Prepaid debit cards are secure, easy to use, and allow us to deliver Americans their money quickly. Recipients can immediately activate and use the cards safely.”
Under the $2 trillion CARES Act that Congress passed in March in response to the economic fallout from the coronavirus pandemic, the IRS and the Treasury have been sending out payments of $1,200 to individual taxpayers, $2,400 to couples, plus an extra $500 for each of their dependent children.
The Treasury said it has already sent more than 140 million economic impact payments worth $239 billion to Americans by direct deposit to accounts at financial institutions, Direct Express card accounts, and by check. The Treasury-sponsored EIP Card is another way to distribute the money efficiently and securely to eligible recipients and their families. EIP Cards are being sent to qualified individuals who don’t have bank information on file with the IRS, and whose tax return was processed by either the Andover or Austin IRS Service Center.
The Treasury’s financial agent, MetaBank, will mail out the EIP Cards to eligible recipients starting this week. Each mailing will include instructions on how to activate and use the card.
The EIP Card is part of the Treasury’s larger U.S. Debit Card program, which offers prepaid debit card services to federal agencies for electronic delivery of non-benefit payments. MetaBank was picked as the Treasury’s financial agent for the U.S. Debit Card program in 2016, after a competitive selection process by the Treasury’s Bureau of the Fiscal Service.
For more information about the EIP Card, click here. For more details about economic impact payments, click here.
