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.
Annie Donovan was director of the U.S. Department of the Treasury's CDFI Fund from 2014 to 2018. She is currently president and CEO of Raza Development Fund, a certified CDFI. Twitter: @ADonovanRDF.
Cody Dong leads MSCI's ESG and climate research for the insurance sector. He also sits on the committee that oversees MSCI ESG Ratings' methodology, quality and model integrity. Prior to joining MSCI, Cody was a strategy and business-development analyst at Alcoa. He also has experience as a sell-side analyst covering Chinese insurance and banking equities. Cody holds a bachelor's degree in business management from Ohio State University and a master's in finance from University of Cincinnati. He is a CFA® Charterholder and holds the designation of Financial Risk Manager (FRM).
Arne Philipp Klug is MSCI's biodiversity research director, overseeing thematic research on biodiversity and natural capital. He engages with investors and key stakeholders to help clients set and prioritize their investment objectives for biodiversity. Arne previously led MSCI'S ESG research on the transportation sector. Prior to joining MSCI, he worked as an ESG analyst and account manager at Sustainalytics in Frankfurt and Toronto. Arne holds a master's degree in communications science, political economics and Hispanic studies from the University of Münster in Germany.
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.
