IRS has code ready for tax refund checks

'As soon as people started talking about the potential for the tax credit, we started doing as much programming as we possibly could.'

' IRS' John Dalrymple

Henrik G. DeGyor

IRS officials have gone out on a limb, predicting a smooth process for mailing out more than 25 million checks for one-time tax cut payments this summer. Unlike a similar situation in 2001, this time the agency has a road map.

After programming code work and testing, the IRS will deliver this year's refunds'advance payments on an increased child credit'with no glitches, said John Dalrymple, IRS deputy commissioner for operations support.

The agency also has an online feature to answer questions about eligibility and when taxpayers will receive their money.

The IRS will send the checks as part of President Bush's recently passed tax cuts. The Jobs and Growth Tax Relief Reconciliation Act boosted the child tax credit to $1,000 from $600, beginning with the 2002 tax returns. The IRS will mail a notice and then a check to each eligible taxpayer for up to $400 for each child under 17.

This time, IRS has planned its path to reach those dates. In the summer of 2001, the agency sent more than 85 million taxpayers checks for up to $600 under Bush's first tax cut.

The hardware and software haven't changed much for this application. 'We learned a lot from the original mailing because we hadn't done one like that before,' Dalrymple said.

The challenges in disbursing tens of millions of refunds largely involve management more than technology, he said. Having done it before makes a big difference.

'It's all about making sure you line up all the right team players,' Dalrymple said.

The IRS assembled programmers from its IT staff, media and publishing personnel for public relations tasks, and workers from the Treasury Department's Financial Management Service, which cuts the checks, to add their technical knowledge.

'We piecemealed that a little bit last time, and frankly it caused us to be wrestling around in the end,' he said.

The IRS began work on the refund checks much sooner this time, too. 'As soon as people started talking about the potential for the tax credit, we started doing as much programming as we possibly could,' he said.

When the bill passed in late May, the tax agency was ready'with only last-minute programming left to do. 'The IRS was testing to make sure that its software was programmed and absolutely running correctly and didn't have any bugs in it,' he said.

IRS programmers found a small glitch during testing that would have affected about 20,000 taxpayers. It was corrected immediately, he said. During the previous tax cut effort, IRS miscalculated the checks for about 500,000 taxpayers, after the information letters went out.

Jumping the gun

FMS also kept its programs from the previous tax cut and modified them to fit the child tax credit. FMS conducted testing with IRS throughout June. 'So we are a bit ahead of the game,' said William Andersen, FMS' chief disbursing officer.

Producing checks is FMS' core business. It cut 253 million of them last year, the majority for Social Security benefits and IRS refunds. In 2001, Treasury sought help from the Defense Finance and Accounting Service, since there were more than three times as many checks to cut, he said. This time, FMS was able to complete the child tax credit refunds in-house because of the smaller volume of checks.

After the IRS calculates the payments and mails letters to taxpayers notifying them of the amount they will receive, it certifies a payment file, which is sent electronically to FMS' Electronic Certification System. The system balances the payments against any offsets and compares the signature on file, then issues the check.

FMS will receive certification and payment files on July 15, Andersen said. The first check goes out Friday, July 25, the next batch on Aug. 1, and the final group on Aug. 8. The timing of the payments is based on recipients' Social Security numbers.

Taxpayers will be able to inquire online if they are going to get a check and when by clicking on the 'Where's My Refund?' feature, introduced early this year. Starting July 14, taxpayers can search for information on their child tax credit checks.

Issuing the child tax credit will cost about $30 million for the IRS and FMS in fiscal 2003 for postage, printing, programming costs and answering customer calls.

Dalrymple, the father of a 9-year-old daughter, will receive a check. 'I wouldn't be so excited about this if I wasn't getting one,' he quipped.

About the Author

Mary Mosquera is a reporter for Federal Computer Week.


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