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While the title may make it sound like the Government is diverting money from deserving Americans to pay for it’s own personal debts, that isn’t the case here. The money being diverted is being diverted from people who have outstanding debts to be paid, such as child support, student loans and unpaid taxes.

What this means for you is very little, unless you are one of the people who has unsettled debts with the state or federal government and your rebate check hasn’t come in the mail yet. At this point, it could very well have been diverted to repay your outstanding debts, perhaps on those student loans you aren’t current with.  If this is the case, the IRS will send you a notice indicating why you received less of a rebate then you were expecting, including a complete forfeiture.

According to the USA Today article, the Federal Government developed a sophisticated new database in 2001 that gets updated weekly with the names of delinquent Americans with various outstanding debts. Before mailing various rebates, such as economic stimulus checks, the names of the recipients are cross-referenced against the database. If your name comes up then your money is diverted directly to the party you owe. The main beneficiaries of this system are families waiting on unpaid child support, which is comforting to know.

Those of you still waiting for your rebate check or battling growing student loan (or other) debts should take heed and look out for notice from the IRS politely explaining why you aren’t getting any money from them at this time.

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