Don't spend your rebate just yet

Washington is working overtime to jolt the economy, but it will probably be May or June before taxpayers see checks.

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By David Goldman, CNNMoney.com staff writer

What will you do with your tax rebate?
  • Spend it
  • Save it
  • Use it to pay off debt
  • Don't expect to get one

NEW YORK (CNNMoney.com) -- Washington leaders have agreed on a $150 billion deal to stimulate the economy by giving workers rebates of as much as $600 or more.

But it could be late spring or even early summer before Americans see any real cash.

The goal for both Democrats and Republicans is to get the money into the hands of consumers as soon as possible.

First the Internal Revenue Service has to cut the checks. That's the tricky part.

The agency is now in the middle of the 2007 tax-filing season - not a great time to have to send special checks to 116 million people.

"It is remarkable that the world's leading economic power can't get checks out the door faster than that," Peter Orszag, the director of the Congressional Budget Office, told the Senate finance committee on Tuesday. "But it's a reflection of the fact that the IRS's infrastructure is in a state that's under pressure and consumed, again, with the normal tax-filing season."

An IRS spokesman declined to comment.

The Treasury Department, which oversees the IRS, said the department and IRS are already discussing how to cut checks quickly.

Treasury Secretary Henry Paulson said Thursday that the IRS should start sending checks 60 days after a measure is enacted. One caveat: For the first two weeks of April, the agency is consumed by the task of processing regular tax returns.

"Within roughly 60 days, we will be able to begin making payments, some electronic, some by check," Paulson said.

It's not clear when a bill would be enacted.

The last similar tax rebate was issued in 2001. The legislation was passed on May 23, and the checks were delivered less than two months later - as early as July 20 for some taxpayers.

But the 2001 bill was finalized after tax season had already ended, which some experts believe gave the IRS the ability to send the checks out faster than they will be able to in 2008.

"The important thing is to get this [legislation] passed," said Paulson. "Until it is enacted, we can't start working to get this going." To top of page

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.