IRS sends wrong message

The Internal Revenue Service blamed a programming error for sending out 500,000 letters this week that misinform taxpayers about the size of the tax rebate they'll be receiving.

The IRS is scrambling to send out new letters with the correct amounts, but it's unclear whether the letters would be received before taxpayers begin receiving the checks.

"It is important that taxpayers understand that all the advance payment checks will be in the correct amount—and more than 99.5 percent of taxpayers receiving the initial letters from the IRS will have the correct information about the payments," IRS commissioner Charles Rossotti said in a statement July 17.

The IRS will be issuing rebate checks of up to $300 for individuals and up to $600 for married couples. The first checks will be mailed July 20, and the schedule is based on the last two digits of a taxpayer's Social Security numbers.

"The programming error affects the letters only," Rossotti said.

The mistake would not have hurt so much if Congress had not appropriated $66 million to send taxpayers letters telling them how much they'll be getting in the form of a rebate. The IRS did not know how much it would cost to send out additional letters correcting the mistake.