Glitches delay payments from IRS

Hundreds of thousands of taxpayers have been waiting longer than expected for their payments from the IRS.

Delays affected those who had fees for e-filing or tax preparation deducted from their refund or who obtained a refund anticipation loan. Those taxpayers will be mailed a paper check, even if they opted for direct deposit, the News-Leader of Springfield, MO reported.

Teresa and Steve Smith of Northville, IL, for example, expected a $2,100 stimulus payment to be directly deposited into their bank account by May 9. "Now, it will be mailed no later than June 20," Teresa Smith told the Detroit Free Press. The Smiths, who have three young children, used TurboTax and had tax preparation fees deducted from their refund. The Smiths got an e-mail alerting them to the problem from Intuit's TurboTax, which sold 16.5 million tax-preparation units for the 2007 tax year.

Intuit spokeswoman Julie Miller told PC World that anyone who paid the $20 e-filing fee by credit card won't be affected by the delay and would have their payment electronically deposited as expected.

Taxpayers who asked for their refund to be deposited into more than one account will also get a paper check.

Another mistake caused about 350,000 filers with children to be shorted the additional $300 stimulus payment per qualifying child. According to the IRS, the problem occurred in about 1 percent of returns eligible for the child stimulus payments. The problem was either caused by failing to check a certain box on paper forms, or by a software error in Petz Enterprises' professional and online software, ProSystems fx Tax software, and CCH's online CompleteTax software.

"To fix the problem, the IRS is taking extra steps to identify the affected taxpayers and send them separate checks to cover their qualifying children," the IRS said. Corrected checks will be mailed automatically in mid-July, and "taxpayers don't need to call or take any additional steps," the statement said.

The Treasury Department has already sent out about 67 million stimulus payments totaling about $57 billion.

While taxpayers are being urged to be patient, Cynthia Jeanguenat, an enrolled agent in Virginia Beach, VA, told MarketWatch that retailers' advertisements aren't helping matters.

"The public perception is that 'my check should be here,'" she said. "Bring your check to Wal-Mart, bring your check to the grocery store, we're all going to give you this money. However, the paper checks weren't going to go out until after May 16, after the direct deposits" and the mailing is still happening, she said.

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