Bill Text: NJ A2074 | 2018-2019 | Regular Session | Introduced
Bill Title: Modernizes the distribution of gross income tax refunds by making direct deposit the default distribution method.
Spectrum: Partisan Bill (Democrat 6-0)
Status: (Introduced - Dead) 2018-01-09 - Introduced, Referred to Assembly Appropriations Committee [A2074 Detail]
Download: New_Jersey-2018-A2074-Introduced.html
STATE OF NEW JERSEY
218th LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2018 SESSION
Sponsored by:
Assemblyman JOSEPH A. LAGANA
District 38 (Bergen and Passaic)
Assemblyman JOHN J. BURZICHELLI
District 3 (Cumberland, Gloucester and Salem)
Co-Sponsored by:
Assemblyman Eustace, Assemblywomen Lampitt, Pintor Marin and Assemblyman Conaway
SYNOPSIS
Modernizes the distribution of gross income tax refunds by making direct deposit the default distribution method.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act modernizing the distribution of gross income tax refunds, supplementing Title 54A of the New Jersey Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. For gross income tax refunds due for taxable years beginning on or after January 1, 2015, the Director of the Division of Taxation shall establish the default system for distributing gross income tax refunds as electronic fund transfer for direct deposit into a recipient's account held by a financial institution, provided that:
the director establishes an alternative system for distributing gross income tax refunds, which system, as shall be determined by the director to be the most cost-effective alternative to the direct deposit default, allows a gross income tax refund recipient the opportunity to elect to receive the refund via conventional check or allows a gross income tax refund recipient the opportunity to elect to receive the refund via prepaid debit card; and
the director determines that the State will sustain no disadvantage in establishing direct deposit by electronic fund transfer as the default system for distributing gross income tax refunds.
b. To the extent the Division of Taxation is capable of implementation, gross income tax refunds that have yet to be issued on or after the date of enactment of this section for taxable years beginning before January 1, 2015 shall be issued in accordance with this section.
c. As used in this section:
"Automated teller machine" means an electronic information processing device which accepts or dispenses cash in connection with credit or deposit accounts.
"Financial institution" means a State or federally chartered bank, savings bank, savings and loan association, credit union, or other entity approved by the director.
"Manual teller terminal" means a terminal or other station staffed by a teller or other individual who accepts or dispenses cash in connection with credit or deposit accounts.
"Prepaid debit card" means an open loop card, which may be reloadable or nonreloadable, that enables the cardholder to: (i) transfer funds assigned to the card to a merchant through a point-of-sale terminal in exchange for products, services, or a combination thereof; (ii) withdraw cash against the balance assigned to the card via an automated teller machine or a manual teller terminal; and (iii) complete, for each gross income tax refund distributed to a gross income tax recipient, not fewer than two transactions involving the domestic withdrawal of cash against the balance assigned to the card via an automated teller machine or a manual teller terminal that is operated by, or on behalf of, the entity responsible for the issuance of the card prior to incurring a charge, surcharge, or other convenience fee for the completion of the transaction.
2. This act shall take effect immediately.
STATEMENT
This bill makes direct deposit the default method for the distribution of gross income tax refunds. The purpose of the bill is to modernize gross income tax refund distribution for increased efficiency.
Under the bill, the Director of the Division of Taxation is required to establish direct deposit by electronic fund transfer as the default method for the distribution of gross income tax refunds for taxable years beginning in 2015 and thereafter. The bill provides that the establishment of direct deposit as the default distribution method is subject to the following conditions:
-- the director must allow refund recipients the opportunity to opt out of the default direct deposit refund method in favor of an alternative method; and
-- the director must determine that the State will sustain no disadvantage in establishing direct deposit as the default refund method.
The bill extends the direct deposit default method for refunds from pre-2015 taxable years that have yet to be issued to the extent the division is capable of extending the method to those taxable years.
With regard to the alternative method, the bill authorizes the director to choose between conventional checks and prepaid debit cards in establishing an alternative system for distributing gross income tax refunds to refund recipients. The bill requires the choice to be made based upon the director's determination that issuing refunds either by check or by prepaid debit card will be the most cost-effective alternative to the direct deposit default system established by the bill.
The bill requires prepaid debit cards, issued pursuant to the bill, to have the following minimum characteristics:
-- Open Loop: The prepaid debit card must be redeemable at a variety of merchants and financial institutions as opposed to a closed loop of related merchants.
-- Redeemable for Products, Services or Cash: The prepaid debit card must be redeemable: (i) for products or services with merchants; and (ii) for cash at automated and manual teller terminals.
-- Minimum Number of Cash Withdrawals: The prepaid debit card must enable the cardholder to complete a minimum number of domestic cash withdrawals (at least two for each gross income tax refund) at certain automated teller machines and manual teller terminals prior to incurring a charge for the completion of the transaction.
Additionally, the bill defines "automated teller machine" and "manual teller terminal," and redefines a "financial institution" as a State or federally chartered bank, savings bank, savings and loan association, credit union, or other entity approved by the director.
