IRS Sends Mistaken Refund Notices By Curt Anderson AP Tax Writer Tuesday, July 17, 2001; 10:33 a.m. EDT

WASHINGTON –– The IRS sent about 523,000 notices to taxpayers informing them they will get the maximum possible tax cut refund check – when in fact they won't.

Internal Revenue Service officials placed the blame Tuesday on a computer program that initially neglected to take into account certain tax credits in figuring the check amount for these taxpayers. The checks are correct, but some people could get a notice promising the maximum and a check for much less.

"What we're doing now is working to get a corrected notice out to the taxpayers," said IRS spokesman Don Roberts.

The IRS hopes to get the proper notices out to the affected taxpayers by next week, which is when the first batch of tax refund checks should begin arriving. The estimated 112 million notices – the vast majority of them correct – were mailed Monday.

The checks of up to $300 for a single taxpayer, $500 for a head of household and $600 for a married couple filing jointly reflect this year's payment for the new 10 percent income tax bracket created by the 10-year, $1.35 trillion tax cut signed into law by President Bush.

That new bracket applies to the first portion of every taxpayer's income, but some taxpayers who had sufficient income still do not qualify for the maximum checks. That's because they claimed child, education or other credits on their 2000 income tax returns that reduced their tax below the check's maximum amount.

The IRS figures that only a few of those taxpayers scheduled to receive checks next week will get less than the amount promised in the notice. If that happens, Roberts suggested that they examine the notice's explanation of how the checks are calculated and compare that with the information their 2000 tax return.

The checks will continue to go out each week through late September to taxpayers based on the last two digits of their Social Security numbers, starting with 00. Most people affected by the mistake should get a corrected notice before their check arrives.

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-- Martin Thompson (mthom1927@aol.com), July 17, 2001