This posting is not only wildly off-topic, it will only be of interest to the
American subscribers to the list.
As everyone in the US knows, the US government has begun the process of
mailing out tax "refund" checks to every tax payer in the US. If you are
single, your maximum refund amount will be $300; if you are head of
household, but single, your maximum will be $500; and if you are married and
filing jointly, it will be $600.
Whether this "refund" was merely very poorly explained or whether it is a
purposefully deceptive sleight-of-hand on the part of the current
administration, it is our understanding, as well as that of Ernst & Young's,
that almost everyone has come to misunderstand what this check really is.
Surprisingly, we run a tax service as a sideline business. It arose as an
outgrowth of our writing business application software for the HP3000 for
local businesses and was further strengthened in anticipation of us writing
new applications for the HP3000 using QCTerm under the new "time-sharing"
model that the internet presents us. While we confine this business to only
Las Cruces at the moment, because all of the H&R Block-like organizations
have long ago closed up shop for the season, our phone has been ringing off
of the hook lately with people asking us how much money they're going to get
back.
Please allow me to explain the situation as clearly as we understand it: The
$600 check you receive is not a refund or a rebate on your last year's taxes,
as has been strongly implied by the White House press conferences. Rather it
is better characterized as an "advance anticipation loan" of the refund that
you will receive in 2002 from the taxes you will pay on this year's earnings.
The way that money is calculated is that if you filed your taxes on your 2000
earnings and received a $1000 refund earlier this year, in 2001, the
government is anticipating that you will file essentially the same tax papers
again next year, on April, 2002, and again you will receive approx. a $1000
tax refund. Of that refund, they're giving you $600 of that money now ("It's
the people's money, and they deserve to have it" has been the mantra). Next
year, if everything you file is essentially the same, you *will* get your
approx. $1000 refund, but it will be *minus* the $600 they're giving you now.
This is obviously going to infuriate a lot of people, simply because it isn't
what they're understanding this money to be. Amost everyone thinks that the
checks are refunds on taxes they've paid in the past rather than an advance
on a future refund. But I would expect that the level of irateness is only
going to get worse, based on the phone calls we've been receiving so far.
One-quarter of the people who file income taxes get no refunds, of course.
They either earn too little to pay taxes or they owe money at the end of the
year -- and these people are surprisingly irate until we explain the
situation to them.
But the people who are going to be really irate are those who, for one reason
or another, received a $1000 refund last year but will owe money in the
coming year. Not only will they owe the money that they would ordinarily owe
the government, they will also have to pay back the $600 they received this
year. It is, after all, an anticipation loan and from the government's point
of view, the antipicated circumstances did not occur.
Further, it's important to understand that this "refund" check is not merely
taxable income that you add into your gross income revenue, it is *the* tax.
Thus, if you wind up this year having to pay additional monies at the end of
the year to the IRS, you will also have to pay back 100% of whatever money
that you received in this coming check.
While we could be completely wrong in this interpretation, simply because no
one is providing hard and fast rules as to what's going on, this is our best
interpretation of what this coming check means.
Wirt Atmar
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