Return to Transcripts main page

CNN Live Sunday

Millions of Americans to Receive Check This Week

Aired July 22, 2001 - 17:33   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
STEPHEN FRAZIER, CNN ANCHOR: Millions of Americans may be a few hundred dollars richer this week. That's because they are supposed to receive the first batch of tax rebate checks. The federal government mailed out 8 million checks Friday, for a total of 92 million, eventually to be sent out by the end of September.

But not everyone will be getting money back. We're going to talk taxes and tax rebates now with Clint Stretch, director of tax policy for consulting firm Deloitte and Touche.

Mr. Stretch, thanks for joining us today.

CLINT STRETCH, DELOITTE AND TOUCHE: Nice to be here.

FRAZIER: Who wouldn't get that kind of check?

STRETCH: About 25 percent of taxpayers won't get any rebate at all; those are people literally who aren't taxpayers, at the low end of the income ladder. They are not paying income taxes, they are getting earned income tax credits, instead where they have a lot of child credit, so they are not paying takes.

There's another probably half as many, again, 13, 14 percent of tax payers who will get a partial rebate, but they are not going to get the full amount. They, again, are at the lower end of the economic spectrum.

FRAZIER: And there are some people with outstanding debts towards which these checks will be applied?

STRETCH: That is absolutely right. If you didn't file your return or you owe tax money or you are in the child support enforcement system, then this money can be captured for those purposes.

FRAZIER: That's interesting, I didn't know the child support was a federal obligation.

STRETCH: Well, there are programs within the IRS where they will go looking for tax refunds that they owe to people. There are a variety of those programs, so it's not a federal obligation, but Congress has given the IRS the ability to go after money that it is about to turn over to taxpayers and use that to satisfy obligations those people have. FRAZIER: Likewise, delinquent student loans. That is a federal program.

STRETCH: That's right.

FRAZIER: So, the money is owed to the federal government. This is interesting. The plan is to try to jumpstart the economy with these 300 to $600 checks. Do you have a sense from your own clients that people are planning to spend this? It has to go into the retail environment and not into savings, if it's to do that.

STRETCH: I think people are pretty much split: about a third will spend it, about a third will pay down their existing credit card debt, and another third will pop it in the bank. But for people who have been struggling with gasoline prices, this will take care of the gas bill (UNINTELLIGIBLE), the increase in cost they had this year. So it's important to them.

FRAZIER: You took pains to point out to us in our early research that this isn't exactly a rebate but it's sort of an advance pay back.

STRETCH: Well, that's right. There's a tax cut for this year, and they are giving it to you in advance, based on what you did last year. If it turns out you didn't really have the tax cut for this year, because you are not working or whatever, you still get to keep it, so it is as if you get the tax cut, either this year or last year whichever will be bigger for you.

FRAZIER: And is it because the visibility of the checks is valuable, that we're going this route, rather than simply reducing the amount withheld; that's sort of an invisible result.

STRETCH: Absolutely. I meet hundreds of taxpayers every year, who say I never got a tax cut. Well, now they will get that check in their hand, rather than just having their withholding adjusted.

FRAZIER: One last question for guys like you, this will rejigger all the rules. Are you caught up now with the changes in the tax law?

STRETCH: The rebate is not very important to the accounting profession; it's straightforward. But the other thing like the estate and gift (UNINTELLIGIBLE), they're very important. And yes, we are doing a lot of work around here.

FRAZIER: So a lot of your clients are coming in with adjustments to their planning.

STRETCH: To their estate planning; absolutely.

FRAZIER: Indeed, well, Clint Stretch, thanks for bringing us up to date, and good luck with the rest of those adjustments.

STRETCH: Thank you.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com