Treasury Prepares to Send Out Tax Rebatesgreenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread
Treasury Prepares to Send Out Tax Rebates Sunday, May 27, 2001 04:55 PM ET
WASHINGTON -- With President Bush poised to order rebates for nearly 100 million taxpayers, the Treasury Department is readying a customized computer program that will sort through Internal Revenue Service records and issue checks ranging from $300 to $600, most by the end of September.
The $1.35 trillion, 10-year tax-cut package Bush intends to sign during the first week of June is retroactive to the beginning of the year, and the rebates are to adjust for overpayment. They reflect the first year of a new 10% income-tax rate on the initial $6,000 of an individual's income, $12,000 for married couples.
Married couples will get checks for $600; single parents will receive $500; and single taxpayers will get $300.
When lawmakers and the White House began discussing the possibility of refunds as a quick economic stimulus, the Treasury Department quietly began preparing for a burst of check-writing activity. Still, it will take up to four months to complete the process, officials said.
"It will be a quick process, but it won't be immediate," said Mike Siegel, spokesman for Sen. Max Baucus of Montana, ranking Democrat on the Senate Finance Committee.
The process will require the government to swiftly identify about 95 million eligible taxpayers, determine the size of their rebates, print the checks and send them.
New software will help the department perform the calculations, and the printing machines that write government and military paychecks and Social Security checks will be employed in their "off time" to write the rebates, said department spokeswoman Michele Davis.
Taxpayers will receive checks that look like standard tax-refund checks, she said. She and Mr. Siegel said most taxpayers should get their rebates by the end of September, though Mr. Siegel said a small number may not go out until the end of the year.
Mr. Bush and many lawmakers were eager to send as much money back to taxpayers as quickly as possible, arguing that doing so could boost the economy. The rebate checks, along with decreasing tax withholdings, will also allow the tax-cut advocates to claim victory as they look ahead to next year's elections.
-- Martin Thompson (firstname.lastname@example.org), May 29, 2001
Possible tax cut complications ahead
How and when will refund checks reach the right people? By Lisa Myers NBC NEWS May 29 — Two key aspects of the new law include the refunds coming, and some little-noticed changes in retirement incentives.
AS MILLIONS of families struggle to figure out what the tax cut means, the Treasury faces its own challenge: how to send out 95 million tax checks. Congress has been warned to expect the inevitable snafus, like checks to taxpayers who should not get them — even the dead — and taxpayers who deserve checks not getting them, especially if they move and don’t leave a forwarding address.
So when will you get your money?
“Sometime in mid July the IRS will be sending out a letter letting taxpayers know the amount of the check they will receive,” says Robert Weinberger of the Treasury Department. “It will tell them the approximate time and the amount of the check they’ll be receiving.” How the tax cut will affect you
In late July, the checks themselves start going out at a rate of about 11 million checks a week, with most getting checks by the end of September. They rebate about $300 for individuals, $500 for single parents with children and $600 for couples.
“It’s meant to stimulate the economy, were going to get some $40 billion out by the end of September into the taxpayers hands,” says Weinberger.
Individual taxpayers will receive a $300 refund this year. Single parents will get $500 and married couples $600. The Treasury Department will mail most checks during August and September. A new 10-percent tax rate is imposed, retroactive to January 1, 2001. The rate applies to first $6,000 of taxable income for single people, $12,000 for married couples filing jointly.
All the other income tax rates are gradually reduced over the next five years, starting with a one-percentage point cut which takes effect on July 1. The top rate will fall from 39.6 percent to 35 percent by 2006.
Taxpayers should start seeing some increase in take-home pay in July. The child tax credit, which benefits taxpayers with children under age 17, will rise from $500 to $600 effective for this tax year. It will then increase to $700 in 2005, $800 in 2009 and $1,000 in 2010. The estate tax will be repealed by 2010. Exemptions to the estate tax will increase before then.
The 15 percent bracket is widened so that more of married couples' earnings are taxed at a lower rate. Contribution limits for IRAs will rise from $2,000 to $5,000. For 401 (k) plans, contribution limits rise from $10,500 to $15,000. But one expert says the last time the government tried rebates, in 1975, Americans saved the money rather than spend it, providing little stimulus at all. So this is mostly about politics.
“This suits the purpose of allowing all the politicians involved on both sides of the aisle to say look, we’re doing something, what more do you want?” says Bruce Bartlett of the National Center for Policy Analysis.
Also buried in this sweeping tax bill is Congress’ effort to do something to help virtually everyone who’s saving for retirement, especially women, giving tax incentives to salt away more money. Advertisement
For those with Individual Retirement Accounts (IRAs) the $2000 yearly contribution limit rises to $3,000 next year and then gradually to $5,000.
Limits on 401ks will also go up from $10,500 this year, gradually rising to $15,000 in 2006. And for those over 50, like Maria Pingree, who stayed home to raise her children, the limits are even higher to allow her to “catch up” for the years she couldn’t save.
“I think it’s a great opportunity for people who came in the workforce much later,” says Pingree.
It’s especially important to 75 million baby boomers near retirement, only 40 percent of whom have saved anything close to what they’ll need.
Refunds this year
Individual taxpayers will receive a $300 refund this year. Single parents will get $500 and married couples $600. The Treasury Department will mail most checks during August and September. Income tax rate cuts A new 10-percent tax rate is imposed, retroactive to January 1, 2001. The rate applies to first $6,000 of taxable income for single people, $12,000 for married couples filing jointly.
All the other income tax rates are gradually reduced over the next five years, starting with a one-percentage point cut which takes effect on July 1. The top rate will fall from 39.6 percent to 35 percent by 2006. Taxpayers should start seeing some increase in take-home pay in July. Child credit The child tax credit, which benefits taxpayers with children under age 17, will rise from $500 to $600 effective for this tax year. It will then increase to $700 in 2005, $800 in 2009 and $1,000 in 2010. Estate tax phase-out The estate tax will be repealed by 2010. Exemptions to the estate tax will increase before then. Easing of marriage penalty The 15 percent bracket is widened so that more of married couples' earnings are taxed at a lower rate. IRA, 401-K expansion Contribution limits for IRAs will rise from $2,000 to $5,000. For 401 (k) plans, contribution limits rise from $10,500 to $15,000.
-- Martin Thompson (email@example.com), May 29, 2001.
O'Neill Looking to Speed Up Refunds By JEANNINE AVERSA Associated Press Writer
WASHINGTON (AP)--Treasury Secretary Paul O'Neill said Wednesday that he hopes the government will be able to accelerate the delivery of millions of tax refund checks, getting them into Americans' hands before September.
O'Neill told reporters at the Treasury Department that he is pushing top officials at Treasury and the Internal Revenue Service to explore all options for speeding up the refunds authorized by the just-passed $1.35 trillion, 10-year tax-cut package.
``I am looking for ways that we might be able to do better than the September period that people have been talking about,'' O'Neill told reporters during a brief interview session at the Treasury Department.
``We may not be able to do better than that, but I am not satisfied that we can't yet,'' said O'Neill, who said he pressed officials during a staff meeting earlier Wednesday to look at various options.
The package approved by the House and Senate on Saturday authorizes individuals to get a maximum $300 back this year, while single parents could receive up to $500 and married couples up to $600.
Even before the tax bill passed, the Treasury Department had begun preparing for the possibility that rebate checks would be provided to an estimated 95 million taxpayers this year, ordering the paper needed to print the checks.
The administration is counting on getting money into people's hands as quickly as possible to stimulate consumer spending and counteract the current economic slowdown.
O'Neill conceded Treasury faced significant logistical problems in getting millions of refund checks to the proper addresses, but he predicted the government would be up to the task.
The IRS was confronting ``all the complex issues of how one sends money back to a population that is constantly moving and relocating,'' he said.
Despite various forecasts that the government will not be up to the challenge, he said: ``I think you will see that the Treasury and the IRS stand up really well to the high standards and excellence in how this job is done.''
O'Neill, who gained widespread praise for his management skills at aluminum giant Alcoa, said he saw his job at Treasury as prodding the IRS to shorten, if possible, the check delivery timeframe that now calls for the first checks to begin arriving in September.
``Part of my job is to keep raising these standards of what excellence means,'' O'Neill said.
While some checks will be mailed to the wrong addresses, he said, government officials were trying to minimize such problems.
The $1.35 trillion tax package, which the administration insisted was needed to counteract the economic slowdown, would boost economic growth by about one-half percentage point over time, he said.
-- Martin Thompson (firstname.lastname@example.org), May 30, 2001.