Challenges for California’s Middle-Class Tax Refund Program
Fraud Within The Middle-Class Tax Refund Program
According to Finger Lakes, The Middle-Class Tax Refund (MCTR) program in California is facing challenges according to a recent audit by the California State Auditor. This Middle-Class Tax Refund program meant to help people cope with the financial impact of inflation and rising gas prices has distributed over $9.2 billion in tax refunds. However, it encountered problems with customer service and worries about fraud. People had trouble accessing funds through issued debit cards and many calls to the helpline operated by Money Network, LLC went unanswered. Fraud concerns emerged because some debit cards lacked the planned fraud-prevention chip technology.
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Governor Newsom Middle-Class Tax Refund Program Faces Structural and Contractual Challenges
Governor Gavin Newsom proposed the Middle-Class Tax Refund program in 2022 to provide up to $1,050 to qualifying residents. The audit found issues in the payment structure of the contract with Money Network. Most of the contract’s total cost was paid out early in the 49-month agreement and there were no provisions for assessing damages if Money Network failed to meet its obligations. In response to the audit, Assemblymember Jim Patterson suggested reconsidering the state’s relationship with Money Network. The audit also recommended creating master agreements with debit-card vendors and exploring different payment methods for future financial relief efforts offering valuable lessons for large-scale programs in the future.