IRS plays tax hunch -- and wins
By Kay Bell • Bankrate.com

Several weeks ago, with Congress still arguing over legislation and the end of the 1999 tax year fast approaching, the IRS played a hunch.

Betting that tax measures affecting millions of filers would eventually get Congressional approval, the IRS pushed ahead with printing forms for 1999 tax returns. The bet paid off -- the forms are correct, they will get out to taxpayers on schedule and an expensive second mailing of tax forms won't be necessary.

Timing is everything
Faced with a printing deadline to guarantee that 1999 tax packages were ready and mailed in time, IRS Commissioner Charles O. Rossotti decided to go ahead and print the materials, assuming that the tax laws would eventually be passed.

The IRS packages went to press at almost the same time the tax bill finally was being OK'd by Congress. The timing ensures that the information is on its way to taxpayers right on schedule -- just after Christmas, according to an IRS spokeswoman.

But the IRS did hedge its printing bet a bit. Some of the tax packages will have a disclaimer, much like the one on the forms the IRS posted on its Web site:

"Attention! Although we are releasing this 1999 Tax Package 1040 in electronic format, please note that changes to tax legislation are being considered. Please continue to check the IRS Digital Daily website at www.IRS.gov for any revision updates."

Not every tax package will have the statement. Because the IRS pushed the printing to the last possible moment, only the tax packages printed first will have the cautionary language. Taxpayers who get the annotated packets will receive a follow-up postcard explaining that no further tax form changes are necessary.

Less costly corrective action
Originally, the IRS has estimated that if Congress did not enact the tax changes, it could cost between $7.6 million and $11.6 million to correct forms.

The higher number took into account the cost of printing of the forms with the disclaimer and then printing a second, corrected package to be re-mailed to taxpayers.

The lower amount was the estimated cost if the forms were correct and the IRS only had to send out a brief follow-up notice that the documents were okay for taxpayers to use.

A spokeswoman for the IRS said it is unclear what this additional correspondence will cost, but it is expected to be even less than $7.6 million. That's because the initial printing was stopped and final forms were corrected when the tax bill was approved.

The IRS also will save money because it held off printing tax packages that are not mailed. These materials, sent to IRS distribution centers and then on to libraries and post offices, will not have the disclaimer and won't need additional clarification.

--Posted Dec. 3, 1999