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Rebates could cost IRS $862 million

June 22, 2008

As IRS Commissioner Douglas H. Shulman was testifying before Congress last week (blogged here) about how his agency was dealing with the delivery of millions of economic stimulus payments, the Government Accountability Office chimed in with its findings on that issue.

The GAO report Tax Administration:
Data on the Effects of the Economic Stimulus Program on the Internal
Revenue Service’s Telephone Service and Costs
(GAO-08-916T) looks at exactly what the title says.

The report’s summary notes that the hastily passed rebate measure "created [an] additional, unanticipated workload for IRS and required IRS to
act quickly to deal with the public’s questions and begin issuing
payments."

The IRS called the demand for rebate-related telephone assistance "unprecedented." For the week
ending May 24, the IRS reported call volume was almost six times greater than the same week
last year.

The table below, compiled by the GAO with the IRS’ help, illustrates the
differences in the two filing seasons when it came to dealing with taxpayer calls. Click here for a larger version
.

Rebatecalls_irsperformance_5

So it’s no surprise that, despite reallocating IRS staff from collections work to answering stimulus-related calls, the percentage of taxpayers who got through to talk with a human declined markedly.

That’s not good news for the IRS, which each year hears as one of the most-common taxpayer complaints that it is too difficult to get help via the service’s hotlines.

But at least this filing season, the IRS had a reason why callers had to wait almost twice as long to talk to someone.

Then there’s the money: The IRS’ job is bringing in money. But administering the stimulus payments is likely to cost the agency, and the U.S. Treasury, much more than all our spending of the checks will recoup.

The IRS received a supplemental
appropriation of $202 million to handle implementation of the economic stimulus
legislation.

But the costs for implementing the economic stimulus
legislation may be up to $862 million. The rebate tab started running back in March with $42 million spent to send out letters announcing that the rebates were coming.

And that nearly $900 million cost isn’t counting what the IRS lost by taking hundreds of IRS staffers away from their collections duties and putting them on the phones to answer the avalanche of rebate calls. That move, estimates the IRS, will
result in up to $565 million in forgone enforcement revenue.

Can you say economic stimulus boondoggle?

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TAX-SAVVY WAYS 
TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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