IRS miscalculates tax rebates on notices to some taxpayers

IRS miscalculates tax rebates on notices to some taxpayers

A programming error by the IRS miscalculated some amounts of the special tax rebates for 500,000 households, and the agency mailed letters with the wrong information to taxpayers before catching its mistake.

'After the letters were printed, we found that a small fraction'less than one-half of 1 percent'have a payment amount that is greater than the check will actually be,' IRS commissioner Charles O. Rossotti said.

'It is important that taxpayers understand that all the advance payment checks will be in the correct amount,' he said.

The IRS last week mailed notices to more than 112 million taxpayers with details about their 2000 rebates. The notices tell taxpayers how much their payment will be and when to expect the check. If a taxpayer does not qualify for a rebate, the letter gives details about a possible credit on this year's taxes.

'We expect to send affected taxpayers a corrected letter by next week,' Rossotti said.

Starting this week, the Treasury Department's Financial Management Service will begin mailing 91.5 million rebate checks. It expects to mail out checks in weekly batches through September. The timing of the mailings is based on the last two digits of each taxpayer's Social Security number.

'Preeti Vasishtha

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