Don't Mess With Taxes

Remember when I blogged about (here) my relative whose ex-husband got their joint $600 rebate (they're retirees, due $300 each) even though they both sent in 1040As as married filing separately? Apparently, that's happening to other folks, too.

According to this MarketWatch story, "Even as millions of people are anxiously checking their mailboxes and bank accounts for their stimulus payments, others have received more than their fair share."

So what's a person to do if they get the excess money? Don't spend it.

The IRS is likely to eventually discover the mistake and want the money back. And since it wasn't properly the taxpayer's to begin with, the agency is within its rights asking for repayment.

This story talks about such instances; it refers to refunds, but the problems and procedures are the same for the economic stimulus payments.

In the case of my family member who's involved in a wrong rebate amount situation, her ex-husband got the erroneous $600 that was meant for joint filers and my relative, the former wife, got her separate, correct, $300 amount a couple of weeks later.

So the ex-husband should be prepared to come up with the overpayment amount. Not that I hold a grudge or anything, but nyah-nyah!

Some extra checks are correct: The MarketWatch story also notes, as did I in this previous blog, that some second stimulus payments are OK.

In these cases, the IRS is making up the rebate shortfall that about 350,000 taxpayers experienced because their original stimulus payments did not include the bonus money for eligible children.

Learning process: This whole rebate process has been a learning process for both taxpayers and the IRS.

Because of the eligibility specifics (you can read about whether you can expect a check here), many filers were confused and sent in incorrect forms that resulted in incorrect rebates. Many of them will be able to correct the mistakes on their 2008 returns they'll file next year.

But some of the screw-ups fall squarely on the IRS.

I know politics played a part in rushing these payments through the system. But still, there are some things the IRS could have done better.

So here's my unsolicited advice for the IRS if it ever has to deal with rebates again.

Trash the timetable: The whole delivery schedule idea. Good intentions, bad PR move. So scrap it!

Remember the 2001 rebates? Those were distributed the same way as these 2008 checks, using the last two digits of Social Security numbers. But seven years ago the IRS didn't put out a firm timetable. That worked OK.

This year, however, folks are apoplectic because they didn't get their rebate money when the IRS said they would. Sure the agency has some legitimate reasons why the delivery dates weren't met, but because they gave folks specific date hopes, they basically invited angry reactions from every person who didn't get his or her check on schedule.

Next time, and I'm sure Capitol Hill will come up with a next time sooner or later, use the 2001 no-delivery-dates method.

Make sure the system is ready to go: Secondly, and most importantly, don't send out checks until you're absolutely, positively sure they are right. If that means the process starts a bit later or takes somewhat longer, so be it.

In the end, people will be happier. Sure they'll complain about the wait, but at least when it's over, things will (should be) correct.

Again, the deadline pressure might have contributed here. In trying, at the constant urging of the Administration, to get the money to taxpayers ASAP, the IRS learned that valuable haste-makes-waste lesson.

True, most folks are getting their checks -- their correct checks -- and in reasonable time. But those who didn't (or aren't) are making life miserable for the IRS, their accountants, their family and friends, for everyone!

From this whole process, the IRS needs to take heed of a basic business lesson: It's much easier and less expensive to do the job right the first time and keep customers relatively satisfied than it is to clean up after your mistakes and make unhappy folks happy again.

Tracking down your correct check: If you filed your return and your rebate delivery date has come and gone, contact the IRS.

You can check out the agency's various Web pages, such as Where's My Rebate? or the IRS' consolidated links found here, for more information. Or you can call the IRS' toll-free Rebate Hotline at (866) 234-2942.