OKLAHOMA CITY (May 19, 2011) – Legislation designed to facilitate faster payment of tax refunds also includes protections to ensure that no Oklahoma citizen’s identity can be stolen, state Rep. David Dank said today.
“This legislation will make it easier for many Oklahomans to receive their tax refund in a timely fashion, and it does nothing that would facilitate identify theft, contrary to the claims of some alarmists,” said Dank, R-Oklahoma City. “The provision providing for card-based disbursement is pro-taxpayer, pure and simple.”
Senate Bill 123, by state Sen. Mike Mazzei and Dank, provides for a card-based disbursement system in lieu of income tax refund checks.
Dank noted that the Tax Commission will not contract with any third-party vendor to administer its direct-deposit system. Instead, that process will be handled through the state Treasurer’s Office, as it always has been.
Third-party vendors would be used only for administering the card-based disbursement system. That contract will be similar to card-based disbursement contracts already utilized by other state agencies, including the Department of Human Services and the Oklahoma Employment Security Commission.
The only information that would be provided to the third-party vendor in that situation is a name, address and amount of refund. A partial Social Security number may be used if necessary.
“I am embarrassed and ashamed that the Legislature would approve a bill that exposes working families to identify theft,” said David Derby, R-Owasso. “I hope the governor will veto this legislation.”
Although the legislation would not allow the Tax Commission to share citizens’ “full social security number” with a vendor, other important personal information could be shared, Derby noted.
“We’re talking about distribution of all our personal information minus our Social Security numbers to outside entities,” Derby said. “This bill does not provide for any controls or any oversight outside those included in the contract, and the bill includes no parameters or guidance regarding the contract or the selection of the third-party vendors. As a result, Oklahoma citizens will be more vulnerable to identity theft. This is a classic case of bad legislation being passed in a rush during the final days of session.”
Existing state law already provides for the confidentiality of information contained in the files of the Tax Commission, and those protections would extend to any entity doing contract work for the agency.
“There are privacy safeguards in current law that will remain in place for the card-based disbursement system,” Dank said. “Citizens will not face any increased chance of identity theft.”
Under the bill, taxpayers who do not wish to receive a debit card can opt for a direct deposit instead.
Dank said the debit card proposal is designed to benefit low-income Oklahomans.
“Many lower-income people who do not have checking accounts will be able to access their cards at most if not all ATMs at no charge,” Dank said. “And they will not have to pay check cashing fees to get their refunds.”
Senate Bill 123 passed the Oklahoma House of Representatives on a 78-18 vote and now goes to Gov. Mary Fallin to be signed into law.
Estimates by the Tax Commission indicate the implementation of the initiative to increase tax compliance will result in an increase in collections. Specifically, the addition of sales and use tax auditors will increase collections by $3.5 million, the income tax audit effort will yield $4.0 million and the additional hearings for sales tax permit holders will result in collections of $11.8 million.
Implementation of the direct deposit and card-based refund system will result in estimated administrative and processing savings of $500,000.