Rebate checks diverted to pay $2B in debts

Very Stimulating. I think some good comes out of this - Rocket River

http://www.usatoday.com/money/perfi/taxes/2008-06-24-deadbeats_N.htm?se=yahoorefer


Rebate checks diverted to pay $2B in debts



So far, 1.8 million rebate checks have been intercepted by Treasury Department computers showing that individuals owe money to federal or state governments.





Yahoo! Buzz Digg Newsvine Reddit FacebookWhat's this?By Dennis Cauchon, USA TODAY
About $2 billion in economic stimulus rebate checks are being confiscated to pay overdue bills for child support, students loans and back taxes, the government says.
So far, 1.8 million rebate checks have been intercepted by Treasury Department computers showing that individuals owe money to federal or state governments.

The biggest beneficiaries: parents who are owed child support.


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"It's a nice bonus for the children and families in need," says Mike Adams, head of child support at the Tennessee Department of Human Services. His state has received $8.5 million of $20 million expected for unpaid child support.

The large take for unpaid debts is the result of an increasingly sophisticated debt-collection program started in 2001.

Today, most states and federal agencies send weekly lists of delinquent Americans to the Treasury Department. Before a rebate is mailed, it's run through a list that contains the names and Social Security numbers of people who owe money.

"We've had a few complaints but not many," says Dean Balamaci, director of debt collections at the Treasury Department. "We're proud that we're sending money back to families who need it."

So far, nearly $1 billion has been collected. Where it has gone:

• 55% for child support.

• 39% for federal debts such as student loans or farm loans.

• 6% for unpaid state taxes.

Taxpayers denied their rebate get letters explaining why they got a reduced payment or none at all.

The diverted money is sent directly to the family or government agency to which it was owed.

A few states, however, are losing out on millions of dollars available through the program.

Michigan doesn't get its delinquent state taxes collected, Balamaci says. The reason: It hires private contractors to collect back taxes.

Also, Mississippi hasn't joined yet, and California doesn't submit the names of income tax debtors.

So while Maryland has collected $6 million from rebate checks for unpaid state income taxes, California has received nothing.