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IRS and FMS IT staff prepare to mail tax rebates


By Patrick Thibodeau

(IDG) -- If the U.S. government is good at anything, it's issuing checks. Hundreds of millions of electronic funds transfers and paper checks are prepared annually for everything from Social Security to payroll. But one of the government's largest check-writing undertakings ever will begin next month when it mails out approximately 100 million tax-rebate checks.

The IT staffs of two U.S. Department of Treasury agencies, the Internal Revenue Service and the Financial Management Service (FMS), have been involved in a process that's set to begin July 23, when federal officials begin printing and mailing out the tax-rebate checks. The mailing will continue for the next 10 weeks, at a rate of about 10 million checks per week.

Officials at both agencies said they're ready. "We have a lot of experience in making payments for government agencies," said Tony Torrice, chief disbursing officer at the FMS, which began handling check payments for government agencies in 1933.

But, he acknowledged, the tax rebate "is a massive project and we're not going to underestimate that." INFOCENTER
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Preparation for issuing the tax rebates began before Congress and President Bush approved the 10-year, $1.35 trillion tax cut at the end of last month. Before the tax cut was approved, the IRS assembled a 15-member team, including programmers, to assemble data from approximately 130 million tax returns for the rebates, according to IRS spokesman Antony Burke.

That IRS data was sent to the FMS, which will process and print the checks. Issuing the rebates is costing the agency $49.5 million, with $40.3 million of that amount going for postage.

The FMS will use IBM mainframes running at about 340 MIPS to create files that will be distributed over a network to regional centers for printing. The laser printers at those centers can print as many as 70,000 checks per hour. The only change needed to the operation was an upgrade to the connection to the agency that will be helping out on the printing of the rebate checks, the Defense Finance and Accounting Service, said John Kopec, executive director of platform services at the FMS. The current 56K bit/sec. connections will be boosted to T1 speeds.

The FMS already handles 85 percent of all federal payments and it made 890 million payments last year. Of that number, 266 million were paper checks, representing a total value of $1.2 trillion in payments.

All of this summer's tax rebates are being issued via paper. Although many tax returns are sent in electronically, federal officials say they have no way of distinguishing between permanent and temporary electronic accounts set up to handle them.

Despite the flurry of paper checks generated by the rebates, the trend is toward more federal electronic payments; 1995 was the first year that electronic funds transfers exceeded paper checks, 426 million vs. 421 million. By 2003, the government estimates that electronic fund payments will account for 70 percent of payments, or 667 million electronic checks vs. 249 million paper checks.

The U.S. government last issued tax rebates in 1975 during the Ford administration. There were about 55 million payments issued at the time.

Internal Revenue Service

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