Several other money-strapped states have mulled going after the taxes.

Spitzer's proposed budget would require Internet giants like Amazon to collect tax on an estimated $47 million in sales to New Yorkers, who are currently required by an honor system to report how much they spend online on their tax returns.

Amazon spokesman Paul Misener says the governor's plan would be a radical departure from anything currently being done in the U.S.

He says other states — including California, Michigan, North Carolina and Texas — have considered similar plans, but abandoned the idea.

To help people who earn little or nothing - and might be more likely to spend their rebates - Congress said that anyone who had at least $3,000 in income from a job, self-employment, Social Security and/or certain veterans benefits would get a flat rebate of $300 if single or $600 if married filing jointly, even if they don't owe income tax.

If your 2007 federal tax liability is between $300 and $600 (single) or $600 and $1,200 (married), your rebate will be equal to whatever you paid in tax.

Anyone who gets a rebate of any size will get an additional $300 for each child eligible for the child tax credit in 2008. To qualify, the child must be younger than 17 on Dec. 31, 2008.

Higher-income people won't get anything.

The rebates - including the $300 rebate for kids - start to shrink when your adjusted gross income hits $75,000 (single) or $150,000 (married). Adjusted gross income includes income from all sources, but before most deductions and exemptions have been subtracted.

The rebate is reduced by $50 for every $1,000 you earn above the income limit. It disappears at some point which varies depending on your family size.

Singles with more than $87,000 in gross income and couples with more than $174,000 get no rebate if they have no children.

Those with children can earn a bit more before losing their rebate because it's bigger to start out with. A married couple with two kids, for example, get no rebate when their income exceeds $186,000, says Mark Luscombe, principal tax analyst with CCH.

Rebates will not be sent to nonresident aliens (you must have a Social Security number to get a rebate), estates, trusts or people who are or could be claimed as a dependent on someone else's tax return. That means most high school and many college students won't get a rebate even if they earn more than $3,000 or pay taxes.

The Internal Revenue Service will start issuing rebates - via check or possibly direct deposit - in early May.

The rebates represent a 2008 tax cut. But instead of getting the tax cut next year, when you file your 2008 return, you'll get it this year.

The IRS, however, will use your 2007 tax return to determine who gets a rebate and how much.

If it turns out that you would have gotten a bigger tax rebate based on your 2008 tax return, the IRS will refund you the difference. For example, a middle-income family that has a baby born in 2008 should be able to reap an extra $300 when they file their tax return next year, Luscombe says.

On the other hand, if you would have gotten a smaller rebate based on your 2008 return, you won't have to pay back the difference, says Bob Scharin, RIA Senior Tax Analyst from Thomson Tax & Accounting.

Most rebates will be out by the summer, but if you don't file your 2007 taxes until the extended Oct. 15 deadline, you won't get yours until year end, CCH reports.

Unlike the 2001 rebates, which went only to people who paid tax, the 2008 rebates will go to many people who don't file tax returns.

The IRS says it will work with the Social Security Administration and Department of Veterans Affairs to make sure all eligible individuals know how to get a rebate.

Tax advisers are encouraging people who had more than $3,000 in income from a job or self-employment in 2007 to file a tax return even if they don't owe tax so the IRS knows how to find them.

The IRS has been warning taxpayers not to fall for telephone or e-mail scams that use the rebate as bait. The perpetrators try to trick people into revealing personal information they use to steal their identities. The IRS never sends unsolicited e-mails.

Also be wary of banks and loan companies that offer refund anticipation loans that include the anticipated rebates when a 2007 return is filed. While apparently legal, these loans can be extremely costly.

Those two assumptions could affect some $1 trillion in revenues over the next five years.

The budget outline presented Monday envisions the loss of $635 billion in revenues over the next five years if Congress makes permanent those tax cuts involving capital gains, the repeal of the estate tax, breaks for married couples and those with children and individual income tax rates. Over 10 years the tax cuts — many set to expire in 2010 if Congress does not act — will cost $2 trillion.

The Congressional Budget Office estimates another $444 billion in interest payments to service that debt over 10 years.

The Democrats who now control Congress show no inclination to extend the tax cuts, arguing that they disproportionately help the rich and the money can be better spent to improve health care or reduce the federal deficit.

The president's proposals to cut out wasteful spending "are dwarfed by the more than $700 billion that would be added to the deficit over the next five years from extending his tax cuts that largely benefit the wealthiest Americans," said House Majority Leader Steny Hoyer, D-Md.

Republicans say that failure to extend the tax cuts would result in 116 million taxpayers seeing an average tax increase of $1,800. "We recognize that in order for this economy to grow, it's important to make the tax relief permanent," Bush said.

The budget proposal also records some $70 billion in lost revenue this year and next under the assumption that Congress will take steps to block the alternative minimum tax from hitting more middle-class taxpayers.

The AMT was enacted 40 years ago to ensure that a small number of very wealthy people can't avoid paying taxes. But the tax was never adjusted for inflation, and Congress has been forced to take stopgap measures every year to shield middle-income-level people from the tax. Legislation passed by Congress in late December kept those affected by the AMT from growing from 4 million in 2006 to 25 million in the 2007 tax year.

House Ways and Means Committee Chairman Charles Rangel, D-N.Y., has estimated that it will cost $800 billion to repeal the AMT. Without that politically difficult action, Congress will have to continue to enact yearly fixes, at a cost of $313 billion over the next five years, the Congressional Budget Office says.

The budget proposal also sees revenue losses of nearly $100 billion over five years from health insurance tax incentives promoted by the White House but opposed by Democrats seeing them as threats to employer-based insurance plans.

The tax break has allowed developers and builders to save money on property taxes because it froze the taxable market value of the land at the time the land is bought. The tax on the land would remain the same until the land is developed and sold.

Since land values generally rise over time and especially if adjoining or nearby lots are sold for houses or businesses the developers and homebuilders will have to pay more property taxes.

The state Supreme Court says county assessors must redetermine the market value of land set for development every year - just like they do for land owned by other property owners.

At a time when millions of Americans are buckling down to prepare their taxes, Snipes is being cast as a villainous example of the dangers of joining with Internet-fueled activists who claim the IRS has no authority to collect taxes.

Snipes, the star of the "Blade" films and "White Men Can't Jump," is on trial with two tax protesters in one of the biggest criminal cases in IRS history, and the agency hopes the media attention on the matter will dissuade others in the "tax avoidance" movement from trying to outwit the government.

"People who do it openly and notoriously, you've got to go after them," said Sheldon Cohen, who was IRS commissioner and general counsel in the 1960s. "Not because he's that important or the amount of money is that important, but because there are others who may be foolish enough to follow."

Snipes, 45, could get up to 16 years in prison if convicted on all counts, although sentences that long are unusual.

"I've always been paying my taxes; I've always been trying to comply," Snipes said Tuesday in his first substantive public comment since the trial began. "The question is if they tell you what you're supposed to do. We need to go to our government and get clear answers."

His two co-defendants are an anti-tax ideologue who refuses to defend himself in court and an accountant who lost his licenses. The trio rested their defense Monday without calling any witnesses, saying they didn't need to.

"Nobody likes paying taxes, but paying taxes is the price we pay to live in a civilized society," Assistant U.S. Attorney M. Scotland Morris said Tuesday in closing arguments. "And it's the law, and that's what this case is about. It's about three men who felt they were above the law."

Defense attorney Robert Barnes conceded Snipes' arguments may have been crazy, but insisted that didn't make them criminal.

"Disagreement with the IRS is not fraud of the IRS, is not deception," Barnes said. "It was an attempt to engage the IRS, to go through the IRS procedures and processes and see who's right."

In lengthy filings to the IRS, the three defendants claimed they did not legally have to pay taxes, citing an obscure section of the tax code that establishes that foreign sources of income for U.S. citizens are taxable. Protesters take that to mean only foreign sources are taxable, and wages made in this country are not.

"They string unconnected things together in a way that they're just not intended to be strung together," said Chris Rizek, a former Treasury Department lawyer who specialized in tax policy. "And the courts have repeatedly said 'No, that's the wrong interpretation, listen to this.' And they just don't listen."

Snipes, who is free on $1 million bond, was paying millions in federal income taxes until 2000 when, according to prosecutors, he accepted the arguments of his two co-defendants. Snipes then allegedly began seeking nearly $12 million in illegal refunds for taxes he already paid.

Snipes, alleged ringleader Eddie Ray Kahn and former CPA Douglas P. Rosile were indicted on eight counts alleging tax fraud, conspiracy and willful failure to file returns. Kahn now refuses to leave his jail cell because he believes the court has no jurisdiction to prosecute him.

The government says Kahn founded a group in the 1990s, American Rights Litigators, and a successor group, Guiding Light of God Ministries, that purported to help members legally avoid paying taxes. Rosile, a former accountant who lost his licenses in Ohio and Florida, prepared the paperwork. Snipes joined their group in 2000.

Witnesses for the prosecution have said up to 4,000 people refused to pay taxes based on the group's arguments.

The three men claimed the IRS is not a legitimate government agency. Snipes also argued in long, bizarre letters that he was a nonresident alien; that the IRS terrorizes and deceives citizens; and that efforts to prosecute him would cause "increased collateral risk."

Most tax cases are handled in civil court, because the IRS does not have enough agents or time to pursue criminal charges against ordinary taxpayers who fudge a deduction or a decimal place on their tax returns.

But pursuing the matter in criminal court carries other risks — the burden of proof is higher, and an acquittal would instantly galvanize the tax-avoidance movement, which already enjoys boundless exposure on the Internet.

The IRS has been successful in pursuing criminal cases against the movement's followers.

Last year, for example, a New Hampshire tax protester vowed to die fighting rather than be apprehended following criminal conviction on several tax charges. Several people were arrested trying to help Ed Brown and his wife avoid capture, and almost all of them were from other states.

Brown and his wife were taken peacefully, but only after agents tricked the couple into surrendering.

But there are exceptions. In 2003, FedEx pilot and tax protester Vernice Kuglin was acquitted because the jury found she sincerely believed she didn't have to pay taxes.

Kuglin's assets were seized, and the government got its tax money. Despite that, her case is held by some protesters as proof that the IRS is a sham, and citizens really don't have to pay taxes.

Cohen, the former IRS commissioner, said trials like Snipes' are important to discourage potential tax scofflaws from defying the government.

"Locks are important on windows to keep honest men from becoming thieves," Cohen said. "Because a thief can get into a window even if it's locked, right? But you do that as a deterrent."

House Speaker Nancy Pelosi said Congress would act on the agreement — hammered out in a week of intense negotiations and uncustomary bipartisanship — "at the earliest date, so that those rebate checks can be in the mail."

President Bush praised the agreement at the White House, saying it "has the right set of policies and is the right size."

The rebates, which would go to about 116 million families, had appeal for both Democrats and Republicans. Pelosi's staff noted that they would include $28 billion in checks to 35 million working families who wouldn't have been helped by Bush's original proposal. Republicans, for their part, were pleased that the bulk of the rebates — more than 70 percent, according to an analysis by Congress' Joint Tax Committee — would go to individuals who pay taxes.

Individuals who pay income taxes would get up to $600, working couples $1,200 and those with children an additional $300 per child under the agreement. Workers who make at least $3,000 but don't pay taxes would get $300 rebates.

The first rebate payments could begin going out in May, and most people could have them by July, said Treasury Secretary Henry Paulson, noting that the IRS will already be overwhelmed processing 2007 tax returns. The rebates were expected to cost about $100 billion, and the package also includes close to $50 billion in business tax cuts.

The principal players in pulling the deal together were Pelosi, House Republican leader John Boehner and Paulson. The package would allow businesses to immediately write off 50 percent of purchases of plants and other capital equipment and permit small businesses to write off additional purchases of equipment. A GOP-written provision to allow businesses suffering losses now to reclaim taxes previously paid was dropped.

Pelosi, D-Calif., agreed to drop increases in food stamp and unemployment benefits during a Wednesday meeting in exchange for gaining the rebates of at least $300 for almost everyone earning a paycheck, including those who make too little to pay income taxes.

"I can't say that I'm totally pleased with the package, but I do know that it will help stimulate the economy. But if it does not, then there will be more to come," Pelosi said.

Boehner said the agreement "was not easy for the two of us and our respective caucuses."

"You know, many Americans believe that Washington is broken," the Ohio Republican said. "But I think this agreement and I hope that this agreement will show the American people that we can fix it and will serve to move along other bipartisan agreements that we can have in the future."

Paulson said he would work with the House and Senate to enact the package as soon as possible, because "speed is of the essence." But he also cautioned that "the work is far from over."

The Treasury Department has already been talking to the IRS about getting the checks out "as quickly as possible, recognizing that the tax filing season is ongoing," said Treasury spokesman Andrew DeSouza.

The rebates would phase out gradually for individuals whose income exceeds $75,000 and couples with incomes above $150,000, aides said. Individuals with incomes up to $87,000 and couples up to $174,000 would get partial rebates. The caps are higher for those with children.

The agreement left some lawmakers in both parties with a bitter taste, and they complained that their leaders had sacrificed too much in the interest of striking a deal. Many senior Democrats were particularly upset that the package omitted the unemployment extension.

"I do not understand, and cannot accept, the resistance of President Bush and Republican leaders to including an extension of unemployment benefits for those who are without work through no fault of their own," Rep. Charles B. Rangel, D-N.Y., the Ways and Means Committee chairman, said in a statement.

Sen. Max Baucus, D-Mont., the Finance Committee Chairman, said leaving out the unemployment extension was "a mistake," as he announced plans to craft a separate stimulus package in the Senate starting next week.

Majority Leader Harry Reid said the goal is to send the package to the White House by Feb. 15 for Bush's signature, but he noted the Senate would likely try to add more spending to the package.

"I expect that the (Finance) Committee and other senators will work to improve the House package by adding funds for other initiatives that can boost the economy immediately, such as unemployment benefits, nutrition assistance, state relief and infrastructure investment," Reid said in a statement.

Asked about this, Paulson praised Reid's leadership but said, "I don't know what he has in mind."

Bush has supported larger rebates of $800-$1,600, but his plan would have left out 30 million working households who earn paychecks but don't make enough to pay income tax, according to calculations by the Urban Institute-Brookings Institution Tax Policy Center. An additional 19 million households would receive only partial rebates under Bush's initial proposal.

To address the mortgage crisis, the package raises the limit on Federal Housing Administration loans from $362,000 to as high as $729,750 in expensive areas, allowing more subprime mortgage holders to refinance into federally insured loans. To widen the availability of mortgages across the country, it also provides a one-year boost to the cap on loans that Fannie Mae and Freddie Mac can buy, from $417,000 up to $729,750 in high-cost markets.

A: No, you cannot deduct as theft losses the amount you invested in Enron stock that is not covered by the reimbursement.

The Internal Revenue Service stated in an April 19, 2004, notice that it would "disallow such deductions and may impose penalties" on taxpayers who claimed theft loss deductions for "the decline in market value of their stock caused by disclosure of accounting fraud or other illegal misconduct of the officers or directors of the corporation that issued the stock."

The tax code limits losses for individuals to:

• Losses incurred in a trade or business.

• Losses incurred in any transaction entered into for profit outside of a trade or business, which are called capital losses.

• Losses of property not connected with a trade or business or a transaction entered into for profit, if such losses arise from theft or casualties, such as fire, storm and shipwreck, which are called theft or casualty losses.

In its notice, the IRS cites several judicial rulings that have found that capital losses do not become theft losses, even when a stock becomes worthless because of "corporate officers misrepresenting the financial condition of the corporation, even when the officers were indicted for securities fraud or other criminal violations."

You can challenge that determination by filing a lawsuit and proving in court that the "loss resulted from a taking of property that is illegal under the law of the state where it occurred and that the taking was done with criminal intent."

Otherwise, claim a capital loss.

Capital losses are deducted first from capital gains, and then again up to $3,000 of other income. Any amounts of the loss remaining can be carried over into future tax years. A carry-over loss may be deducted from capital gains in later years plus up to $3,000 of ordinary income.