- The Washington Times - Friday, July 20, 2001

Next week the IRS will begin mailing out tax-rebate checks made possible by the enactment of President Bush's 10-year, $1.35 trillion tax-cut plan.
The checks, worth up to $300 for an individual taxpayer and $600 for a married couple filing jointly, reflect the retroactive creation of a new low tax rate. The 10 percent rate — effective Jan. 1, 2001 — applies to the first $6,000 of income for a single taxpayer and on the first $12,000 of income for a married couple filing jointly. This new rate is down from the previous 15 percent rate.
Taxpayers do not need to fill out any forms to get the rebate.
But if a taxpayer has moved since filing the 2000 tax return, he does need to file a change of address form with the U.S. Postal Service to ensure the checks go to the correct address. Taxpayers may also notify the Internal Revenue Service (IRS) directly by filing Form 8822, Change of Address.
The checks will be mailed sequentially based upon the last two digits of a person's Social Security number.
Those with Social Security numbers ending with numbers from 00 to 09 will have their checks mailed the week of July 23. The last checks, going to those with Social Security numbers ending with the numbers 90 through 99, will go out the week of Sept. 24.
By then, Americans will have received nearly $40 billion in rebate checks, providing what many say is a needed stimulus to the nation's sagging economy.
While the checks are being called "rebates," they are technically an advance payment of the tax refund for the new 10 percent income-tax rate.
Many taxpayers have already begun to feel the benefits of the other marginal income-tax-rate cuts included in the tax bill passed in the spring.
Earlier this month the IRS revised withholding tables to reflect those other marginal rate cuts that took effect July 1.
Although the checks are welcome relief to some families, the rebate has already caused some confusion and consternation.
In the hopes of heading off questions, the IRS sent out an anticipatory letter telling people they would be getting the rebate and how large the check would be. Those letters began turning up in mailboxes yesterday.
In the rush to send the letters out, the IRS erred in calculating the rebate amount on about 500,000 of those letters.
Critics also say the tone of the letter — which specifically credits President George W. Bush for the rebate — and its relatively informal look make it seem more like a political or commercial solicitation than an official document.
While the letter may appear informal, the IRS says taxpayers should not throw it away. The letter will be the only written documentation of the size of the rebate they will receive: information they will need when filling out their tax returns next April.
When calculating their tax returns, people will have to take into account the fact they have already received a rebate.
Those still owed more than their rebate will receive a refund of the remainder.
On the other hand, those who owe less than their rebate will not be required to remit the rebate.
This year's advance payment will be 5 percent of the taxable income shown on the 2000 tax return.
Because the rebate is based upon last year's tax return, those who have not yet filed a return will receive no rebate.
Similarly, those who would otherwise be eligible to receive a rebate, might see that rebate reduced to pay past income-tax liabilities or to offset other federally overseen debts, such as child-support payments.
For example, the IRS will send out 8.5 million checks totaling $3.381 billion next week. Of those checks, 500,000 will have been reduced to pay $205 million in past tax liabilities, according to the agency.
Also, the IRS says that 134,000 people will see their rebate reduced by $44 million due to unpaid child-support payments.

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