US Government Sends Incorrect Refund Notices To Taxpayers

Tax-News.com, New York

18 July 2001

The US Internal Revenue Service has sent out notices to 112 million taxpayers telling them how much they are going to get back in tax cut refunds - but the IRS sent about 523,000 incorrect notices telling taxpayers they will get the maximum possible tax cut refund check when in fact they won't.

Some Internal Revenue Service officials placed the blame Tuesday on a computer program that initially neglected to take into account certain tax credits in figuring the check amount for these taxpayers; others were more open in ascribing the glitch to a 'programming error'. It's easier to blame a computer than admit you made an error, of course. "What we're doing now is working to get a corrected notice out to the taxpayers," said IRS spokesman Don Roberts.

Although some notices are wrong, the actual refund checks are correct; but some people will get a notice promising the maximum and a check for much less. The IRS hopes to get the proper notices out to the affected taxpayers by next week, which is when the first batch of tax refund checks should begin arriving. The IRS says taxpayers need only wait for the mail and need not take any other action.

Taxpayers should generally expect to receive tax refund checks based on the last two digits of their Social Security numbers, according to the Internal Revenue Service. For married couples filing jointly, the first Social Security number on the return will be used.

00-09: Week of July 23
10-19: Week of July 30
20-29: Week of Aug. 6
30-39: Week of Aug. 13
40-49: Week of Aug. 20
50-59: Week of Aug. 27
60-69: Week of Sept. 3
70-79: Week of Sept. 10
80-89: Week of Sept. 17
90-99: Week of Sept. 24

The checks of up to $300 for a single taxpayer, $500 for a head of household and $600 for a married couple filing jointly reflect this year's payment for the new 10 percent income tax bracket created by the 10-year, $1.35 trillion tax cut signed into law by President Bush.

That new bracket applies to the first portion of every taxpayer's income, but some taxpayers who had sufficient income still do not qualify for the maximum checks. That's because they claimed child, education or other credits on their 2000 income tax returns that reduced their tax below the check's maximum amount.

The IRS figures that only a few of those taxpayers scheduled to receive checks next week will get less than the amount promised in the notice. If that happens, Roberts suggested that they examine the notice's explanation of how the checks are calculated and compare that with the information on their 2000 tax return.

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