7-22-2001, President Bush said Friday that "help is on the way" as the first tax refund checks hit the mail, but more than 34 million taxpayers will get no check or far less than they expect ---- mostly because the Social Security and Medicare payroll taxes they paid don't count.

The tax refund checks of up to $300 for individuals, $500 for heads of households and $600 for married couples filing jointly are based on income tax liability during 2000.

Most of the taxpayers who won't get a full refund paid income taxes during the year ---- along with their Social Security and Medicare taxes ---- but claimed enough offsetting credits, such as the $500 child tax credit and education credits, to get a refund that ultimately reduced their income tax to zero ---- meaning they don't qualify for a check.

If the Treasury Department's projection of 34 million is accurate, it would mean about one in four taxpayers will get no refund check.

Liza Grady, the wife of a Camp Pendleton Marine, opened a letter this week expecting to hear about the $600 tax rebate owed to her and promised by Bush as relief to American taxpayers as part of his $1.6 billion tax cut plan.

Instead, the Internal Revenue Service told her that she and her family will get just $69.

"This is wrong," Grady said Thursday. "Sixty-nine dollars does not relieve me of anything."

Grady is one of an estimated 91 million Americans nationwide who an IRS spokesman said will get a rebate of their federal taxes as part of the tax relief bill approved by Congress on May 26 and signed by Bush into law June 7.

This week, some residents began receiving letters telling them about the tax rebate check they may receive from the IRS.

Some people will get checks for less than the promised amount because they didn't pay enough income taxes in 2000. Others will get smaller checks because they owe delinquent child support, back taxes, or are behind on student loans. In this first batch of checks, about $245 million was deducted for these reasons, including $205 million in back taxes, according to the IRS.

Checks won't be in the mail for taxpayers who were claimed as dependents on someone else's return, even those who had tax liability last year. Nonresident aliens also get nothing.

But working-class, low- to middle-income families such as the Gradys said they were unaware that they might get less than what lawmakers and politicians had touted. They heard talk of $600, $500 and $300.

So the couple expected to get a rebate check for $600, not less.

"I don't remember anyone saying 'up to,' " Liza Grady said.

The tax rebate is actually the reduction of 5 percent of federal income tax from the 15 percent bracket to the new rate of 10 percent. The new rate was made retroactive to Jan. 1 of this year.

The rebate "is a refund on the money already withheld for this year," said Chris Conley, an IRS spokesman in Laguna Niguel.

But that is of little consolation to working-class families such as the Gradys who expected to get the maximum amount and were unaware that they might get less.

Forget about fuzzy math. To them, the rebate rules are fuzzy English.

Liza Grady was practically in tears as she held the IRS notice of their upcoming $69 rebate. For months, she and her friends, family and even co-workers listened to TV reports about the tax-cut plan.

Like optimistic lottery players, they planned how they would spend the money. Some expected to pay down credit-card balances, cover household bills or save it, and some parents planned to buy new school clothes and supplies.

But taxpayers who get child credits likely won't get the maximum rebate, one tax preparer said. The rebates "come just in time to get the kids' back-to-school clothes. But these are the people who aren't going to get it," said Roz Capuchino of Agape Financial Services in Oceanside. "People are going to be irate."

Senate Majority Leader Tom Daschle, D-S.D., was careful Friday not to criticize the refund checks ---- Democrats actually came up with the idea first ---- but said they should have been sent to everyone who pays federal taxes, including payroll taxes.

Daschle predicted that Republicans could suffer some political backlash because "they're going to raise the expectations for a lot of people that aren't going to get any check at all."

The difference between $600 and $69 means a lot to a family like the Gradys.

The Oceanside couple earned less than $30,000, with Liza working as a full-time waitress and bartender at Marie Callender's restaurant in Carlsbad, and her husband, Marine Cpl. Antoine Grady, assigned to an infantry battalion at the Camp Pendleton Marine Corps Base. Liza Grady broke the news Wednesday to her husband, who is overseas and asked how much the family was getting.

They believed that tax relief would help people such as them: hard-working, paying taxes, but living paycheck to paycheck. That is what they heard from the president, lawmakers and news reports on tax reform and Bush's $1.35 billion tax-cut plan.

"The media coverage tended to focus on the maximum amount that people would get," said Dale Neugebauer, chief of staff for U.S. Rep. Darrell Issa, R-Vista. "Somehow, the words 'up to' get dropped off. It gets lost somewhere along the way."

The law includes the words 'up to.' Still, on the day Bush signed the plan into law, press briefer Ari Fleischer spoke of taxpayers "on the threshold of receiving $300 and $600 checks." He didn't say "up to."

The IRS mailed two separate notices to taxpayers about the checks ---- one described how much taxpayers who get checks will receive and when they should arrive; the other listed reasons why some wouldn't be getting one.

The IRS intended the notices to clear up confusion, but many taxpayers have been calling the agency to pin down why they were left out. "I think we're all going to be getting a lot of calls," said U.S. Rep. Earl Pomeroy, D-N.D.

About 32 million notices with bad news about the checks went out this week, but IRS officials say that was before all returns were processed and does not count taxpayers with extensions who still haven't filed.