Surprise! Having a “free check” for folks by requiring them to file when they don’t normally have to file isn’t quite as simple as you’d think.
The IRS has announced that more than 25% of eligible seniors have not filed tax returns for 2007. This means that those seniors will not receive a rebate check
So yes, the IRS is going to spend more money sending out another mailing to advise seniors to file. Nice, huh?
Yes, I sound a little bitter. It’s not that I don’t want folks to get their checks. It’s because this economic stimulus package has been a disaster from start to finish – full of mixed messages, IRS mistakes and misinformation from the administration.
And now, we get the price tag. In addition to the $168 billion in “free money” being mailed to taxpayers (which will clearly be made up in later years), the costs of administering the economic stimulus package may reach close to a billion dollars.
IRS initially received $202 million to carry out the economic stimulus legislation – the cost, as mentioned before, of all of the ads in the Super Bowl.
The Social Security Administration received a supplemental of $31 million and Financial Management Service (which manages the Offset Program) received $64 million.
Add that to the reallocation of hundreds of IRS collections staff to answering taxpayer telephone calls – estimated by the IRS to be $565 million in foregone enforcement revenue. These costs are in addition to the significant reduction in IRS’s telephone service, which has been overwhelmed (by a factor of 6) by calls about rebate checks – the costs of the resulting reallocations have not yet been reported.
Add in more “publicity” for the programs as noted above – the initial (non-targeted) mailings cost $42 million. And the costs keeps rising.
I’ll tell you what’s being stimulated – clearly disguised government pork.
Is it true that President Bush wants to call tax rebate checks “empowerment rebates”? Is it also true that President Bush wants to replace tax rebate checks with a pair of tickets to the Tony Robbins seminar, Unleash The Power Within?
No, of course not. But that doesn’t keep Mark Jabo at Biz Levity from speculating about it… Read this genuinely funny (and satirical) post about tax rebates.
The House of Representatives unanimously passed bill H.R. 6081, the Heroes Earnings Assistance and Relief Tax (HEART) Act of 2008. The chief sponsor of the bill was Rep. Charles B. Rangel (D-NY).
The revised HEART Act (previous versions of the bill have already passed the House and Senate) would allow thousands of active duty military families to receive a stimulus check they were previously denied because a spouse did not have a valid Social Security number. Under the current economic stimulus plan, taxpayers cannot receive a rebate if one spouse does not have a valid Social Security number; an ITIN is not sufficient. The revised bill only applies to military families.
The bill accomplishes a number of other things for active and retired military, including:
- Making permanent the ability to include combat pay as earned income for purposes of the Earned Income Tax Credit (EITC);
- Making permanent the expiring Internal Revenue Code provision that permits active duty reservists to make penalty-free withdrawals from retirement plans;
- Permitting recipients of military death benefit gratuities to roll over the amounts received, tax-free, to a Roth IRA or an Education Savings Account;
- Providing a tax credit for small employers with respect to wages paid to employees who are on active military duty; and
- Permitting members of the reserves called to active duty to withdraw amounts held in a Flexible Spending Account (FSA) without penalty.
I’d love to hear your thoughts on this. Is it fair for active military to get special tax treatment – such as allowing them to receive a tax rebate when other taxpayers in a similar position may not?
And then take it a step further… What should the criteria for special tax treatment be? Should it extend to other folks who put their lives on the line – what about police officers and fire fighters? Who is a hero, really?
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economic stimulus, military, tax, rebate
A reader just passed along this letter from Bob Meighan at TurboTax that several folks have apparently already received:
Dear Valued Customer,
We want to provide you with the most up–to–date information about the tax rebate to which you may be entitled.
Recently, you may have received a letter from the IRS advising you when to expect your Economic Stimulus Payment (rebate). That IRS letter may have inadvertently left off some important information. Taxpayers who chose to have their tax preparation fees deducted from their federal tax refund will receive their tax rebate in the mail, not via direct deposit.
Our records show that you chose this payment option in TurboTax. As a result, the IRS has determined that you will receive your tax rebate in the mail. This may result in you receiving your rebate on a date later than expected.
This situation, while not unique to TurboTax, is understandably causing some concern and confusion. To help further clarify the situation, below is the most current IRS rebate payment processing schedule, as well as additional resources about the tax rebates.
I hope you find this information helpful. If you still have questions, the best source for the most up-to-date information is www.irs.gov (see the “Rebate Payment Questions” link).
Sincerely,
Bob Meighan
Vice President, TurboTax Customer Advocacy
I’m not surprised to see this level of response to angry customers concerning the timing of the rebate checks and opting to pay fees out of refunds. I’ve already posted that I believe class action lawsuits (though ridiculous in this case) will be forthcoming. Looks like TurboTax is trying to cut them off at the pass. TurboTax has also posted information about rebates on its website.
What do you think? Good enough?
