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For those of you who owe the IRS money for taxes in years gone by, the news is not good. Your tax rebate check will be reduced, at least partially, and applied to your tax bill.

Those who owe taxes don't get refunds in new tax years until their old debts are paid. All refunds go toward that old debt, and the same will hold true for these rebate checks. However, no one is sure yet if you will receive a partial check or if the full amount will be applied to your tax debt.

If I were you, I'd actually hope for them to apply the whole rebate to your outstanding debt. Owing the IRS money year after year is never a good thing. The interest and penalties are expensive, and it's terrible for your credit report and credit score. So the sooner you can get that IRS debt paid off, the better.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

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