New Rebate Checks May Delay Spring Tax Refunds

Part of the $100 billion tax stimulus package passed last week by the House includes a plan to offer a second wave of income tax rebate checks, this time to lower income people who may not have qualified for the rebate checks that were dispatched earlier this year.

The Senate is currently deliberating on a similar tax stimulus bill that also includes a tax rebate program.

But the IRS is balking at the proposal and IRS Commissioner Charles Rossotti is warning that issuing a new set of rebate checks in such a short time frame "poses an extremely high risk to the tax system," and could cost the agency an unbudgeted $58 million in processing expenses.

In addition, Mr. Rossotti suggests that a new rebate program, designed to be coordinated with year-end holiday shopping, will cause up to 23 million of the normal spring income tax refund checks to be delayed three to five weeks and may result in the agency being liable for interest payments to taxpayers for the late refunds.

Senator Max Baucus, chairman of the Senate Finance Committee, is taking all of this information into consideration as the Senate moves forward on this legislation. "We're re-examining it," he said of the rebate program, "but I do know that the faster we get it done, the faster the checks can go out."

Both Republicans and Democrats in the Senate are supportive of the proposal to issue a new round of $600 rebate checks to taxpayers who did not qualify for the first rebate. Senator Baucus stated that the program to mail an additional 50 million rebate checks is on a "must pass" list before the year-end.

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