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IRS making sure your rebate gets spent

Rico Gagliano Apr 1, 2008

IRS making sure your rebate gets spent

Rico Gagliano Apr 1, 2008

Editor’s Note: April Fool!

This “story” is fictitious. It was done as an April Fool’s joke. The federal government is not sending snowblowers and air conditioners to taxpayers.

JASON BERLIN as Gordon Atkinson,
SUNNI PETERSEN as Stacey Atkinson,
KATIE MASSA KENNEDY as Beverly Jaworsky,
ROBERT REICH as himself.


Kai Ryssdal: You might have gotten a little note from the Internal Revenue Service recently telling you about your forthcoming rebate check. It’s part of the economic stimulus package Congress and the White House agreed on a couple of months ago. Most taxpayers will get anywhere from $600 to $1,200 back from Uncle Sam.

The hope is that we’ll spend it to buy things, which would be what the government wants to give the economy a kick in the pants. The worry is that many have said they’ll pay down debts instead. So, with some taxpayers, the IRS isn’t taking any chances.

Marketplace’s Rico Gagliano reports.

Rico Gagliano: Hello!

Stacey Atkinson: Hi!

Gordon Atkinson: Hey! How ya doin’!

Gagliano: Gordon and Stacey Atkinson live in Phoenix Arizona, in a home they bought with a subprime loan.

Gordon: Come on in.

Like many subprimers, they’re having a hard time paying the mortgage. So, eager for their $1,200 rebate check, they filed their taxes in February.

Stacey: And I was expecting — or we were expecting — a rebate check shortly thereafter.

It eventually arrived. Sort of.

Gordon: We get this thing in the mail. It’s addressed from the IRS. I had no idea what it was.

Stacey: So, we open up the package, and, well actually, I can show you what was inside of it. Do you want to come see it?

Rico: Yeah, sure.

Stacey: It’s an air conditioner.

Gordon: A General Electric “Zoneline” air conditioner.

After they got over their shock, the Atkinsons called the IRS for an explanation. So did I.

Beverly Jaworsky: My name is Beverly Jaworsky. My title is Debt-To-Purchase Ratio Assessor.

Armed with a huge IRS database, Beverly and others like her have spent the last few months identifying taxpayers who’d be most likely to use their rebate checks to pay off debt.

Jaworsky: Someone who may be listing their house on the market as a short sale, for instance. Or students with student loans. Or screenwriters.

Then those taxpayers get special rebates.

Jaworsky: Instead of receiving that check that they were going to receive, we send it to them in the form of retail goods, in relative value to what their check would have been.

In other words, the government makes sure these taxpayers’ rebates get spent in the manner intended by spending it for them. On stuff. But how to be sure it’s stuff the taxpayer actually needs?

Jaworsky: You know, we plug in Social Security numbers into our database, we find where the people live, and we send them something that would be suitable to their lifestyle.

That’s why a couple in the Arizona desert might get an air conditioner. Someone in Boston might get a snowblower. Jaworsky says the program will target only about a million taxpayers, but that equals close to a billion dollars guaranteed to be injected into the economy.

Even so, critics say it’s not worth the effort. Former Labor Secretary Robert Reich is a professor of public policy at the University of California at Berkeley.

Robert Reich: It’s too little, too late. Also, the government is not terribly good at knowing what individual people want, even in the same neighborhood. I mean, my neighbor might want, say, Viagra, but if the government ships a toaster oven to my neighbor and ships Viagra to me — and by the way, I don’t use Viagra — that’s not going to be terribly efficient; I would much rather get the toaster oven. Now, I suppose my neighbor and I could barter, but then I would have to know exactly what the government shipped my neighbors and it would be difficult for all of us to get together and know that fact.

Reich also notes the government can send a rebate check for the price of a 41-cent postage stamp. Sending toasters or bikes could cost a lot more taxpayer money. But Beverly Jaworsky says the IRS gets a discount.

Jaworsky: Well, we own the Post Office and they’ll do as we say.

Meanwhile, back in Phoenix, the Atkinsons are of two minds about their air conditioner rebate.

Gordon: I love it, ’cause I get really hot sometimes, but, unfortunately, she doesn’t feel the same way, I don’t think.

Stacey: Yeah, because I mean we’ve got a ton of debt and this thing’s going to increase our utility bills.

Gordon: OK, true, we could lose the house, but until then it’ll be cool and comfortable.

In Phoenix, Arizona, I’m Rico Gagliano for Marketplace.

RYSSDAL: Oh, c’mon, check your calendars, everybody.

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