Tax rebates cause delays, problems for IRS

WASHINGTON - The Internal Revenue Service says a key element of the economic stimulus package now before Congress - getting a new batch of tax rebate checks out in time for the holiday shopping season - is impossible to achieve.

     Even worse, the IRS warns that no matter when the checks go out, they will put the agency far behind in its regular work, probably delaying up to 23 million income tax refunds worth a total of $43 billion next year.

     In a letter to congressional leaders, IRS Commissioner Charles Rossotti said issuing a new round of checks in a short time "poses an extremely high risk to the tax system" that also includes greater chance for errors and would cost the agency an additional $58 million.

     Even if the agency got definitive instructions by Friday, Rossotti said, checks wouldn't get out until January at the earliest. That would be too late for people to spend their checks at stores during the December shopping season, which many lawmakers have said is the goal.

     The $100 billion economic stimulus plan passed Wednesday by the House included $13.7 billion in rebate checks of up to $600 for millions of lower-income workers who didn't qualify for those mailed out earlier this year. Others who only got a portion of the full amount would get the remainder.

     President Bush has endorsed the rebate check idea; Republicans and Democrats in the Senate say their version will include them. Rossotti estimated that 50 million checks would be mailed out.