July 11,2001

Baucus and Grassley Letter to Treasury Secretary Paul O'Neill Concerning Tax Rebates


WASHINGTON – Sen. Max Baucus, Chairman, and Sen. Charles Grassley, Ranking Minority Member of the Committee on Finance yesterday sent a letter to Treasury Secretary PaulO’Neill concerned that seven million taxpayers might receive late notices and tax rebate checks from the IRS.

The text of the letter follows.

July 10, 2001
The Honorable Paul H. O’Neill
Secretary of the Treasury
Department of the Treasury
Washington, D.C. 20220

Dear Mr. Secretary:

The Committee on Finance is concerned that the tax rebate process mandated by The Economic Growth and Tax Relief Reconciliation Act of 2001 be implemented smoothly, efficiently and securely.

According to the Act, the amount of the rebate check is to be computed from information reported on an individual’s Federal income tax return filed for tax year 2000. The Internal Revenue Service (IRS) compiles the necessary information during its processing of tax returns,which is then used to determine the amount of the check. Such information is also used to determine if an individual is eligible to receive a check. The IRS will then send taxpayers a notice describing the amount of the tax rebate check, the week it will be sent, and the possibilityof an offset for an outstanding government debt.

It has been brought to our attention by the Treasury Inspector General for Tax Administration that approximately seven million full-paid returns were not included in the initial compilation of taxpayer information used by the IRS to generate these notices. As a result, these seven million taxpayers will not receive their notice in a timely manner and may experience a delay in receiving their tax rebate check. We understand that these taxpayers may experience delays up to 10 weeks.

This is a serious matter that deserves an immediate and appropriate response. These taxpayers filed their tax returns for 2000 in a timely manner and paid their taxes in full. They are entitled to and deserve better service from the IRS. Moreover, notice delay for these seven million taxpayers may result in additional calls and/or letters to the IRS from concerned taxpayers asking why they did not receive their IRS notice or check by the date publicly specified.

To help mitigate this problem and to minimize the number of taxpayer inquiries, we suggest that the IRS promptly process the remaining full-paid returns as soon as possible and issue a press release informing taxpayers who filed full-paid returns that their notice may be delayed and the reasons for the delay. We would also encourage the IRS to alert its customer service representatives about the nature of this problem and instruct them on how to address taxpayer complaints.

We appreciate your prompt attention to this matter.

Sincerely,

Max Baucus, Chairman 

Charles Grassley, Committee on Finance Ranking Member