State Tax Problems
CA Legislature Approves Audit of Middle-Class Tax Refund Program
The California legislature has approved an audit of the Middle-Class Tax Refund (MCTR) program, which has been fraught with issues.
In October 2022, the State of California began mailing debit cards and issuing direct deposits to those eligible for the program.
Qualified residents were granted one-time payments between $400 and $1,050 for couples who filed jointly or between $200 and $700 for those who filed individually. The amount was based on 2020 tax return information.
Initially, many recipients reported problems with activating the debit cards they received in the mail. The Los Angeles Times shared a story from Jose Ahumada, who has found himself unable to use his $350 tax refund to pay for daily essentials like groceries, gasoline, and credit card payments.
He told the Times, "The website and customer-service numbers don't provide any help or assistance, and the only way to activate the card is via phone."
The activation problems were eventually resolved, but then reports of MCTR debit card fraud began rolling in.
Sacramento's KCRA 3 shared details about specific cases, noting that one person their reporters spoke to saw expenditures in both Laguna Niguel and Newark, New Jersey – the individual had not visited either location. Another California resident had fraudulent charges in Burbank, while others experienced unauthorized payments in Anaheim and Orange County.
10 News San Diego shared details about the newly approved audit, which was originally proposed in January by Assemblymember David Alvarez, chairman of the Joint Legislative Audit Committee.
Alvarez’s initially request included a commitment to identify any computer issues related to refund delivery, and an assessment of whether technology problems could have resulted in fraud. The request also commanded a review of the contract between the Franchise Tax Board and the vendor that produced MCTR debit cards.
According to a spokesperson from Alvarez’s office, the audit could take up to six months to perform.
In the meantime, it is worth noting that the IRS will not tax these state refund payments at the federal level.
Did you face Middle-Class Tax Refund issues in California?
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