Reasons for delayed and no-show tax rebate checks pile up

— -- The next time lawmakers decide to stimulate the economy, maybe they should arrange for a fleet of helicopters to drop $100 bills over populated areas.

That might not be a very efficient way of getting money in taxpayers' pockets. But given the events of the past couple of weeks, this much is clear: It's not easy for the government to give away money.

So far, the IRS has issued more than 45 million tax rebate payments, totaling nearly $41 billion. The payments, ranging from $300 to $600 a person, or $1,200 for a married couple, were distributed mainly by direct deposit to taxpayers who arranged to have their refunds delivered that way. The goal of the direct-deposit program was to get money into taxpayers' wallets as fast as possible.

But hundreds of thousands of taxpayers who had their e-filing or tax-preparation fees deducted from their refunds are belatedly discovering that they'll receive their checks by mail — even if they received direct deposit of their refunds.

The reason: If you arranged to have fees deducted from your refund, the tax-preparation company used a third-party bank to process the transaction. If, for example, you used TurboTax, the transaction was handled by Santa Barbara Bank & Trust. The IRS transmitted your refund to a temporary account at the bank, which retained its own fees, sent the tax-preparation fees to the tax preparer and deposited the balance of your refund in your account, says Julie Miller, spokeswoman for TurboTax.

As a result, Miller says, the IRS has no actual bank account information for taxpayers who had their fees deducted from their refunds. Those taxpayers — along with taxpayers who applied for a refund-anticipation loan — will receive their checks by mail. The IRS began mailing paper checks on May 16 and will continue mailing them through July 11 (see box).

Miller says TurboTax posted a notice on its website on March 23, stating that taxpayers who had fees deducted from their refunds would receive their rebates by mail. That's when the IRS announced how it would handle those transactions, she says. By that time, though, many taxpayers had already filed their tax returns.