First wave of checks are in the mail
By By SONNY CALLAHAN
Two weeks ago, the United States Treasury Department mailed out the first shipment of an expected 92 million refund checks to American taxpayers.
These checks represent the most immediate result of the reforms included in the $1.3 trillion tax reform package signed into law by the president. The changes in the current tax rates were a part of the Economic Growth and Tax Relief Reconciliation Act of 2001 and were the first major adjustments to this system in two decades.
These reforms were a major initiative of President Bush during his campaign, and he wasted no time once in office in following through on this promise.
But just how significant are these changes?
To give you an indication of how important n and rare n this tax package was, here are a few statistics to keep in mind:
– The last time the income tax structure was altered, in 1981, Dallas was the number one rated show in America;
– Iran had recently released the 52 American Embassy hostages who had been held for 444 days;
– Ronald Reagan was in the midst of his first year as president;
– The Rubik's Cube was the top selling toy in America; and
– Prince Charles and Princess Diana had just been married at St. Paul's Cathedral in London.
Twenty years certainly passed in quite a hurry, didn't it? However, while the world around us changed dramatically during that time, the need for real and significant tax reform has not.
I've gotten quite a few calls from constituents since the Internal Revenue Service (IRS) mailed out the repayment notices earlier this month, mostly concerning what they perceive as inaccuracies in the amount of money they are due to receive.
In an effort to help clarify exactly the terms of the tax reform, and explain the eligibility requirements for these payments, let me take a few minutes to explain just what is involved.
In general, individuals who had a federal income tax liability for 2000 and who could not be claimed as a dependent on someone else's tax return are eligible for a 2001 advance payment this year.
Those individuals who could be claimed as dependents or did not have an income tax liability will not receive a payment.
The amounts of these advance payments are up to $300 for a single taxpayer, up to $500 for a head of household, and up to $600 for a married couple filing a joint return. The amount eligible taxpayers will receive was calculated based on five percent of the taxable income (subject to the limits mentioned earlier in this column) that was shown on their 2000 tax returns.
To find these amounts, you can refer to the returns you filed with the IRS this past April. Your taxable income is located on Form 1040, line 39, on Form 1040A, line 25, and on Form 1040EZ, line 6. Those of you who filed your returns electronically can check line K of your printout.
However, it is also important to note that the payment a taxpayer could potentially receive cannot be more than the person's tax liability minus any nonrefundable credits. These amounts can also be checked on your tax returns (Form 1040, line 51; Form 1040A, line 33, and Form 1040EZ, line 10).
In the case of any existing outstanding government debt which may be on a taxpayer's record (student loans, back taxes, etc.), the refund will be offset. The IRS has, for these situations, stated they will clearly and fully explain how and why any offset will occur.
Time frame for payment
The mailing of these advance payments is based on the last two digits of your Social Security number, and will occur each Friday through the end of September.
For information on when you might expect your payment and additional information on how to calculate your potential refund, the IRS has placed recorded information on their TeleTax system. You can reach this service by calling 800-829-4477.
And of course, if any of you has any further concerns or questions regarding these refunds, you can contact my Mobile office at 800-288-8721, and I will certainly do all I can to get you the answers you need.
Until next week, take care and God bless.