Earning a buck: Las Vegas business owner gets $1 check for fed tax rebate

Monday, Aug. 6, 2001 | 10:43 a.m.

The Internal Revenue Service is mailing out 92 million tax rebate checks during a 10-week period. Taxpayers whose Social Security numbers end in 00-19 should have received their checks. Those whose Social Security numbers ending in 20-29 should receive their checks this week. Here is the rest of the mailing schedule:

30-39: Aug. 12-18

40-49: Aug. 19-25

50-59: Aug. 26-Sept. 1

60-69: Sept. 2-8

70-79: Sept. 9-15

80-89: Sept. 16-22

90-99: Sept. 23-29

SOURCE: Internal Revenue Service

Jeff Robinette looked at his $1 tax rebate check, which he received in the mail last week.

"A pack of chewing gum costs $1.06," he thought.

Robinette, a local businessman who last year made $60,000 and paid more than $3,000 in Social Security taxes on those wages, is a victim of an apparent glitch in the rebate system that, in effect, penalizes small business people who keep good tax records and make improvements to their businesses that can be written off against their taxes.

Robinette's accountant factored in all of his client's receipts. Consequently, he got Robinette's tax liability down to $1.

Though Robinette realizes he got his tax break up front by not having to send Uncle Sam several thousand dollars in tax payments simply to receive the maximum $600 rebate for married and filing jointly status, the 30-year-old father of two believes the rebate system is flawed.

"When it was being discussed, the idea of tax relief was to help poor and working people, but it didn't turn out that way," said Robinette, co-owner of Robinette's Cabinet & Carving Shop on South Arville Street. "I feel more sorry for poor people, because $600 is something they could really have used."

Under the rebate system, a taxpayer gets the lesser of the following: $600 for filing jointly -- $500 for filing as head of household or $300 for filing single; 5 percent of their taxable income; or their total tax liability. As a result, people earning poverty-level wages who don't pay taxes also don't receive rebates.

The IRS, however, says that all is not lost for small-business people and the poor.

"They may be able to get a credit on their 2001 returns if circumstances change," said Bill Brunson, IRS regional spokesman in Phoenix. "They will have to do the computation next year, but the potential exists for them to receive some or all of the maximum rebate allowed by law."

This mean means that Robinette and others in his situation will have to have a good wage-earning year, coupled with fewer deductions, which will mean a higher tax liability. Under such circumstances Robinette could recapture up to $599 on his 2001 tax return in the form of a credit.

As for the poor, those who find steady, full-time jobs in which they earn significant taxable income also will be allowed to deduct up to the maximum amount of the rebate from their 2001 returns. This is minus what little money they receive this year in the rebates, which will be sent through September.

Bill Robinette, Jeff's father and business partner, said the system is too complicated.

"All people heard was $300 for single and $600 for married, and not the 'up to' part," said Bill, husband of longtime Las Vegas Sun executive assistant Cindy Robinette. "I don't know whether that is the fault of the taxpayer, the media's explanation of it or the IRS not explaining it clearly.

"But we feel we are overtaxed. One year we put $32,000 in the bank, and our taxes were over $30,000. That meant just an $1,800 profit for our business. That's not right for the working man."

By contrast, Bill Robinette and his wife paid enough taxes last year to get the $600 maximum rebate. Still, he also believes the poor should have received a better break in the process.

"Some people spent the money on back-to-school clothes or computers for their kids, thinking they would get it back with their big rebate," he said. "Some are in for a real shock."

The Robinettes suggest that a fairer way to compute the rebate would have been to give everyone a $600, $500 or $300 tax credit up front for their 2001 returns, then factor in their income.

"That would have made a lot more sense than to put in the man-hours, do the paperwork and spend the postage to send out a $1 rebate check," Bill Robinette said.

Brunson, however, said the rebates for many Nevada taxpayers have been significant.

On Friday the IRS mailed 61,689 checks to Nevadans totaling about $25.34 million -- an average of $411 per check, Brunson said. Last week Robinette was one of 60,830 Nevadans to receive checks totaling nearly $24.97 million -- again, an average of $411 per check.

During the first week of the program the IRS sent 61,986 Nevadans checks totaling $25.54 million -- an average of $412 per check, Brunson said, noting that the checks to date have been on time. By the end of September 695,000 Nevadans will have received $292 million, Brunson said.

Jeff Robinette has special plans for his rebate check, neverthless.

"I'll put it in a frame and hang it here in the shop," he said.