Direct Deposit of Tax Refunds to IRAs

Subtitle C, Explanation 10

10. Direct deposit of tax refunds in an IRA

Present Law

Under current IRS procedures, a taxpayer may direct that his or her tax refund be deposited into a checking or savings account with a bank or other financial institution (such as a mutual fund, brokerage firm, or credit union) rather than having the refund sent to the taxpayer in the form of a check.

Explanation of Provision

The Secretary is directed to develop forms under which all or a portion of a taxpayer's refund may be deposited in an IRA of the taxpayer (or the spouse of the taxpayer in the case of a joint return). The provision does not modify the rules relating to IRAs, including the rules relating to timing and deductibility of contributions.

Effective Date

The form required by the provision is to be available for taxable years beginning after December 31, 2006.