STPG Tax: What It Is & Why It’s on Your Refund
See how STPG functions as a financial intermediary, processing your IRS refund to cover tax preparation costs before sending you the balance.
If you have seen a reference to STPG or Santa Barbara Tax Products Group on your tax documents, it is a financial services company that partners with tax preparation software and professional tax preparers. A subsidiary of Green Dot Corporation, STPG acts as an intermediary for taxpayers who choose to pay for their tax preparation services directly from their refund. This option is commonly called a “Refund Transfer.”
When a taxpayer selects this service, they authorize the IRS to send their refund to a temporary bank account set up by STPG. The company’s involvement is to facilitate the payment of tax preparation fees without requiring you to pay for those services upfront.
The Role of STPG in Your Tax Refund
A Refund Transfer is an optional product for taxpayers who prefer the convenience of having their tax preparation fees deducted directly from their refund amount rather than paying for them out-of-pocket. When you select this option, you authorize your tax preparer or software to include STPG’s temporary bank account information on your electronically filed tax return. Consequently, the IRS does not send the refund to your personal account, but instead direct-deposits the full amount into a holding account managed by STPG.
This arrangement allows them to manage the payment distribution as agreed upon. It is important to understand that a Refund Transfer is not a loan. STPG does not provide your money any faster than the IRS issues it, as the service is for payment processing. This differs from a “Refund Advance,” which is a loan based on your expected refund and is a distinct financial product from the Refund Transfer service.
Understanding the Associated Fees
When you opt for a Refund Transfer, your refund is reduced by at least two fees before the balance is sent to you. The first deduction is the tax preparation fee itself. This is the amount your tax preparer or software company charges, and STPG collects this fee on their behalf.
The second is a service fee charged by STPG for managing the transaction. The fee for this Refund Transfer service is $44.95. In addition to this charge, other costs, such as a technology fee or a document processing fee, may also be deducted from your refund. There may also be an additional fee if you opt to receive your final funds via a paper check instead of direct deposit; for example, some providers charge a $25 fee for this service.
These fees must be disclosed to you before you agree to the service when you file your taxes. In mid-2024, the Federal Reserve Board fined STPG’s parent company, Green Dot Corporation, $44 million. The action was taken because STPG and a partner did not clearly disclose the full costs of the service to consumers.
For example, imagine the IRS issues a federal refund of $2,500. If your tax preparation software charged $120 and the STPG service fee is $44.95, the calculation would be $2,500 minus $120 for tax prep, minus $44.95 for the transfer fee. The final net amount deposited into your personal bank account would be $2,335.05.
The Refund Transfer Process
The process begins once the IRS has approved your tax return. The U.S. Treasury sends the full refund amount via direct deposit to the temporary bank account established by STPG. This account information was embedded in the tax return you filed.
Upon receipt of the funds, STPG deducts the pre-authorized tax preparation fee owed to your tax preparer and its own service fee. These amounts were agreed upon when you initially chose this payment option. After the fees are subtracted, the remaining refund balance is sent to you using the disbursement method you selected during filing.
For most people, this means a final direct deposit into their personal checking or savings account, which appears within one to two business days after STPG releases the funds. Other options can include loading the funds onto a prepaid debit card or issuing a paper check. Taxpayers can usually monitor this part of the process, from when STPG receives the refund to when it’s sent out, through a dedicated tracking portal on the STPG website.