Electronic Funds Transfer:

Analysis of Proposal for Direct Deposit of Income Tax Refunds

IMTEC-89-34: Published: Feb 24, 1989. Publicly Released: Feb 24, 1989.

Additional Materials:


Office of Public Affairs
(202) 512-4800

In response to a congressional request, GAO assessed a proposal to use electronic funds transfer to pay federal income tax refunds and other nonrecurring payments directly into taxpayers' bank accounts.

GAO found that: (1) although the Internal Revenue Service (IRS) already offered electronic refunds on electronically filed returns, the proposal would be costly to implement for paper returns; (2) a potential existed that taxpayers and IRS staff would make errors in transcribing the bank routing and transit number and the taxpayer's bank account number using paper returns; (3) the proposed provision to notify the taxpayer by mail before making the electronic payment was unnecessary, costly, and could delay refund receipt; and (4) there would be little time saved in issuing refunds by electronic transfers, rather than by checks, since a direct deposit refund would arrive only 1 to 4 days before a check. GAO also found that: (1) the Treasury Financial Management Service stated that the cost of preparing and issuing a check was 30 cents, while the cost of preparing and issuing an electronic transfer was 4 cents; and (2) until a way was found to reduce the error potential and the cost, IRS would offer the direct deposit option to taxpayers filing paper returns.

Jan 30, 2018

Dec 20, 2017

Dec 18, 2017

Nov 30, 2017

Nov 28, 2017

Sep 6, 2017

May 18, 2017

May 17, 2017

Apr 27, 2017

Apr 26, 2017

Looking for more? Browse all our products here