Sponsored by:
Senator PETER J. BARNES, III
District 18 (Middlesex)
SYNOPSIS
Modernizes the distribution of gross income tax refunds by making direct deposit the default distribution method.
CURRENT VERSION OF TEXT
As introduced.
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 shall allow a gross income tax refund recipient the opportunity to elect to receive the refund via conventional check as an alternative to the direct deposit default; 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:
“Financial institution” means a State or federally chartered bank, savings bank, savings and loan association, credit union, or other entity approved by the director, which owns or operates branch office teller terminals or automated teller machines.
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 a conventional check; 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 of Taxation is capable of extending the method to those taxable years.