Tax-cut checks should be in the mail by end of summer
WASHINGTON (AP) – Let the mailbox vigil begin. Millions of tax-cut checks should be arriving by the end of summer, if not sooner.
Treasury Secretary Paul O’Neill said Wednesday he’ll do everything he can to speed delivery of the checks – up to $300 for individual taxpayers and a maximum $600 for couples – in the government’s first mass tax refund in a quarter century.
Congress authorized the rebates in the $1.35 trillion, 10-year tax-cut package approved last weekend.
As it now stands, most of the estimated 95 million taxpayers eligible for rebate checks probably will see them in their mailboxes in September. But O’Neill said he is pushing officials at Treasury and the Internal Revenue Service to explore all options for getting the checks out before then.
”We may not be able to do better than that, but I am not satisfied that we can’t yet,” O’Neill said during a brief interview session at the Treasury Department. Neither O’Neill nor Treasury officials elaborated on the possibilities.
The hope is that people will spend the money, thus providing a boost to the sagging economy.
”Roughly half of the population is struggling and living almost paycheck to paycheck and those folks will use the tax rebate almost immediately,” predicted Mark Zandi, chief economist at Economy.com. ”It will be good timing.” In all, he believes roughly half of each refund check will be spent and half saved.
Under the legislative package, which Bush is expected to sign into law soon, individuals would get a maximum $300 back this year, while single parents would receive up to $500 and married couples up to $600.
The refund checks come to 5 percent of a filer’s first taxable income, based on last year’s figures: the first $6,000 for an individual filer and $12,000 for a married couple. Congress in the tax legislation lowered the bottom tax rate for 2001 to 10 percent from 15 percent.
Under the current procedures, the IRS in July will send a letter to every person who submitted a tax return for 2000 by the mid-April deadline, Treasury spokeswoman Michele Davis said. The letter will tell them whether they are qualified for a refund check, how much they will get back and when the check will be mailed, she said.
Refund checks will start going out at the end of July at a rate of 11 million checks a week, continuing probably through the end of September, Davis said. People who requested a tax-filing extension, will receive their checks at a later date.
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.
O’Neill, former head of the aluminum giant Alcoa, said he saw his job in this case as prodding the IRS to shorten, if possible, the check delivery timeframe.
While some checks will be mailed to the wrong addresses, he said, government officials were trying to minimize such problems. Treasury officials said people who filed a tax return in 2000, moved and filed a change-of-address form should get their checks.
The $1.35 trillion tax package, which the administration said was needed to counteract the economic slowdown, would boost economic growth by about one-half percentage point over time, O’Neill estimated, a figure that some private economists agreed with.
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