What would you do with $42 million? Retire? Take an extended vacation? Buy a mansion?
Well, if you were the tax man, the answer is to spend the money sending letters that serve little purpose. We can think of better ways to use our tax dollars.
The IRS recently sent letters to 130 million households that filed a tax return for 2006 about the federal government’s plan to send rebate checks generally of $600 for an individual or $1,200 for a couple to stimulate the struggling economy.
Is there anyone who hasn’t heard about the rebate checks from the news over the past few months?
The first round of IRS letters that went out basically says if you file a tax return in 2007, your check will be coming in a couple of months. You don’t have to do anything else.
So why do we need to spend $42 million sending the letters that will just wind up in the trash? Find a better use for the money.
To be fair, not all of the letters on the rebates are useless. The cost of the next round can be justified because those recipients actually will have to do something different to get their rebates.
Those letters will go to people, such as retirees, who didn’t file a tax return for 2006 because they didn’t have enough income. However, if they have at least $3,000 in income for 2007, which includes Social Security, tier 1 railroad retirement and veterans disability or death benefits, they can receive a rebate check of $300 for an individual or $600 for a couple, which we’re sure they can put to good use.
To get a rebate, they will have to file a Form 1040A this year. If the filing is just to qualify for a rebate, only parts of the form have to be filled out, generally the personal information; any income reported on a W-2; their total federal benefits from the sources above, any nontaxable combat pay, the information for direct deposit of the rebate into their account and a signature.
Filers should write ‘‘Stimulus Payment’’ across the top of the form. More information is available on the IRS web site at www.irs.gov.
Sending letters to people who have to do something to get a rebate has merit. Spending $42 million to send letters to people who essentially don’t have to do anything is a waste of our money.