IRS Says It Can't Send Out Another Batch Of Checks Speedily

by Mike Godfrey, Tax-News.com, Washington

29 October 2001

The Internal Revenue Service says it would be unable to meet a government demand to send out a batch of tax rebate checks in time for the Christmas shopping season and even when the checks are sent they would put the IRS so far behind its usual work that it could delay the processing of up to 23 million income tax refunds next year amounting to over $40 billion.

What could be even more alarming for the government is that the requirement to send out the rebate checks by a certain time is a key factor in the success of the economic stimulus package which Congress is currently deliberating over.

AP news agency has reported that IRS Commissioner Charles Rossotti has written a letter to Congress explaining that issuing a new set of rebate checks in such a short time 'poses an extremely high risk to the tax system,' places a higher risk on the IRS to make more errors and could cost the agency a cool $58 million.

Many of the lawmakers involved in forming the economic stimulus package have stated that the checks should be ready before Christmas but Rossotti has said that the agency has not yet received instructions and when they do come through the IRS would not be able to send all the checks out until some time in January which completely defeats that particular goal of the stimulus package.

Sen. Max Baucus, chairman of the Senate Finance Committee, told reporters on Thursday that he felt there was still time for the IRS to organise its workload. 'We're re-examining it,' he said, 'but I do know that the faster we get it done, the faster the checks can go out.'

Baucus added that the checks were on a 'must-pass' list before the year-end, but Senate Majority Leader Tom Daschle has said that the provision was 'not as front-burner an issue' as others such as government spending bills.

Rossotti also raised concerns over the potential loss of money for the government if the checks must take priority and the agency is forced to delay its regular work of processing income tax refunds. This would result in three to five week delays, he said, which 'could require the government to pay interest if the delay exceeded the time required under the law for issuing refunds.' Between 9 million and 23 million refunds, worth $17.7 billion to $43.2 billion could be delayed.

As an alternative, Rossotti suggested that the lawmakers consider adding the new rebate to any refund taxpayers may receive from their 2001 tax returns which is due next April and to deduct the amount from those who owe taxes. 'We are looking at it,' responded Baucus.

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