$3 Billion blindspot in CA MCTR?

California's Middle Class Tax Refund (MCTR) was supposed to bring some relief to families trying to fill up their gas tank and put food on the table. It is a large program, over $9 Billion USD. And it proceeded with an apparent lack of oversight, lack of control, and lack of accountability! I think Californians and Americans of all political persuasions now need to ask some hard questions about the competence of everyone involved in the creation and oversight of MCTR, and whether to advance these people to positions of higher responsibility and authority, or whether to send them packing from public office!

1) At this time it appears to me that MCTR payments will not be taxable by the IRS and federal government. But shouldn't that question of taxability have been answered BEFORE, not after, the creation of the MCTR program? Had it been determined those payments were taxable, as much as 1/3 or $3 BILLION would have been essentially gifted from CA to the Federal treasury! And even now that it appears determined to apparently be non taxable, recipients received or will receive 1099s by mail, the printing and postage and handling of those 1099s is now a complete waste, and may mislead some self prepared taxpayers to accidentally and mistakenly include these payments in their taxable income.

2) "ACCEPTABLE" fraud in the MCTR may reach $90 Million! The latest developments from KCRA 3 Investigates MUST BE READ at this link https://www.kcra.com/article/california-middle-class-tax-refund-gov-newsoms-office-tally/42819683 There is enough security in the credit card refund system to cause the MCTR credit cards to be unwieldy to legitimate users, yet there is not enough security to prevent fraud. Many credit cards were issued without security chips and others have fallen prey to "skimmers". Credit cards are difficult to register, recipients cannot easily reach human customer service agents with answers, and many recipients were never asked if they might prefer a check or bank transfer instead of a credit card. Could fraud from California's Middle Class Tax Refund be in the hundreds of millions of dollars? According to KCRA 3 the contractual level of "acceptable" fraud was 1% or about $90 Million! According to KCRA 3 Gov. Gavin Newsom's office says we have to wait for the program to "wrap up." before we will know actual levels of fraud!

3) What is "Money Network" and why were they selected for this? According to KCRA 3 at this MUST BE READ link https://www.kcra.com/article/middle-class-tax-refund-what-is-money-network-california/42739856, Money Network was acquired by First Data Resources, a payment service company originally based in Omaha, Nebraska that has been acquired by Fiserv. Fiserv is not a bank, which means that Fiserv and Money Network are not regulated by any of the federal banking regulators. This is why they use My Banking Direct, a service of New York Community Bank to issue the debit cards. New York Community Bank is inactive, it merged with Flagstar Bank, which is a regulated institution. New York Community Bancorp, Inc. appears to be the parent company of Flagstar Bank, N.A. NYCB, Inc. appears to be headquartered in Hicksville, New York. According to the FTB, Money Network was chosen because it was the only bidder that stated it could put security chips on all of the debit cards, yet KCRA 3 has previously reported that some Californians experienced fraud after receiving debit cards without security chips. If FTB and the Governor ware not up to selecting a good vendor, could they at least have selected a California vendor? Is there a possible clawback from Money Network for failing to put security chips in all cards as promised in their bid?

4) Following months of issues with California's Middle Class Tax Refund payments, the leader of the state's Joint Legislative Audit Committee, Assemblyman David Alvarez, the Democratic chairman of the committee, appears to be calling for a review of the inflation relief program and apparently announced he will pursue a state audit of the Franchise Tax Board's handling of the payments. While I applaud Alvarez and his committee for their oversight, I also believe any half competent CPA firm would have noticed most of these problems and concerns if given a chance to review the program BEFORE, rather than after, inception. I believe that most of these problems were preventable! I question the competence and judgment of those responsible for the creation and oversight of this program for failing to involve a competent CPA firm in the sourcing and review of this program! It may have been important to expedite the program but not at the cost of the potential huge problems described above!