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Communications from the Institute do not constitute, and should not be considered a substitute for, legal advice.
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August 8, 2006
TO: PENSION COMMITTEE No. 26-06
PENSION OPERATIONS ADVISORY COMMITTEE No. 25-06
TRANSFER AGENT ADVISORY COMMITTEE No. 52-06
RE: DRAFT INSTITUTE COMMENT LETTER ON IRS SPLIT REFUND PROJECT
Attached for your review is a draft comment letter to the Department of Treasury and the
Internal Revenue Service regarding the split refund project. This initiative will allow taxpayers to split
the electronic direct deposit of their tax refunds to multiple accounts and to designate an IRA as one of
the recipients.
The letter is in follow-up to a meeting that Institute members and staff had with Treasury and
IRS on June 28. The letter begins by supporting the goal of increasing opportunities for Americans to
save for their future. The letter reports the results of an informal survey of Institute members regarding
capabilities to accept direct deposit of tax refunds. The letter then makes a number of suggestions:
• No change should be made the rules regarding the deadline for prior year IRA
contributions, which under current rules must be received by the IRA custodian or
trustee (or postmarked) by April 15, at least not for the first year that split refunds are
available. The letter points out the operational issues that need to be worked out if the
deadline were to be extended.
• Treasury should provide guidance on the treatment of IRA contributions received
between January 1 and April 15 where the IRA owner does not provide instructions as
to the year the contribution relates.
• IRS should not restrict the types of accounts that can accept direct deposits.
• The instructions to new Form 8888 should be drafted so as to reduce the chances of
error by the taxpayer.
2
• IRS and the Financial Management Service should coordinate the rules for applying
offsets to income tax refunds.
Please provide any comments you have on the letter to Mary Podesta (202/326-5826 or
podesta@ici.org) or Michael Hadley (202/326-5810 or mhadley@ici.org) by Monday, August 14.
Mary S. Podesta
Senior Counsel - Pension Regulation
Attachment (in .pdf format)