This year's refund check, thanks to federal tax cuts that passed in May 2003, is likely to be fatter. But some early birds are having to contend with a worm of a different kind.

More than a few filed 2003 returns with errors that IRS computers can easily detect. These errors occurred, accountants said, because many people in late January received incorrect interest, dividend and capital gains income statements - via consolidated Forms 1099 - from their brokers and mutual funds.

Many brokers and mutual funds have since mailed out corrected Forms 1099; some have even mailed out corrections for forms previously corrected.

The early filers - especially if the corrected forms show dramatic increases in income - will need to quickly file amended returns, several accountants say, to avoid having to pay a penalty.

"This problem (with erroneous Forms 1099) is just starting to haunt a few taxpayers, and they're not taking the news well," said John Evanich, a certified public accountant with Haggett, Longobardi & Co. LLC in Glastonbury, Conn. With roughly 50 million taxpayers having already sent returns to the IRS, as many as 1 million could contain errors requiring quick corrections, according to estimates from several accountants.

Errors on Forms 1099 are hardly a new problem. The Securities Industry Association, or SIA, a brokerage industry trade group based in Washington, estimates that 5 to 8 percent of Forms 1099 contain errors in any given year. But for the 2003 tax year, as many as 25 percent - or one in four - of the Forms 1099 could contain errors, said James Spellman, a spokesman for the association.

The Form 1099 problems are rooted in the 2003 tax code, which was revised last May. The new tax code has introduced two levels of taxation for dividends and interest income, when there used to be only one. It even created multiple classes of dividends, some of which are taxed as regular income while others are taxed at a new lower rate.

It has also created new categories for capital gains: After May 5, or on or before May 5, and for property or stocks held for five or more years and sold at a gain or loss on or before May 5, 2003.

In making all these changes, the new laws have created challenges where few used to exist, some taxpayers have said.

"The basics - income and capital gains - can no longer be divided into just two parts. It's a lot harder this year," said Basil Thomas, a South Windsor, Conn., resident who makes his living owning and renting real estate in the Hartford area.

Since the early 1990s, Thomas has prepared his grandmother's return; this year he surrendered, and is handing the job off to an accountant.

Accountants have approached this season by telling clients to wait a bit longer than usual before filing their 2003 federal tax return, Evanich said. Brokers have done the same. Anticipated mistakes led some brokerage firms in January to enclose letters with Forms 1099 that said errors were likely this year. There is a "high probability that much of the 1099 data provided to us would need to be amended," Wachovia Securities told its clients.

One look at Form 1099, circa 2003, quickly explains why errors were expected. The documents are heftier, with several more categories for interest, dividend and capital gains income, accountants said.

Mutual funds, publicly traded companies and brokerage firms have to gather the information that constitutes a consolidated Form 1099. Those surveyed, as expected, said the data-gathering job for 2003 was more difficult than in previous years. The law, after all, was changed in the middle of the year - late May 2003.

"Our mutual funds' tax department worked harder and longer this year to get the tax information out on time, and correct. They spent literally hundreds of hours doing research and calculations to ensure the calculations were correct and in compliance with the tax laws," said Sharon Bray, a spokeswoman for Phoenix Investment Partners, the money management subsidiary of The Phoenix Cos. in Hartford.

Phoenix manages 43 mutual funds at several offices around the country. The company said all of its 1099-related information was correctly reported for 2003.

Brokerage houses faced an even larger challenge than individual fund companies. Brokerage houses rely on fund companies to report tax information. A stream of reporting errors from one mutual fund company, or even one mutual fund, could force amendments to thousands of Forms 1099, industry sources said.

For example, at Scottrade, based in St. Louis, the online brokerage house sells funds from more than 300 families, and it sent out 625,000 Forms 1099 in late January. Of those original 625,000 tax reporting forms, 11 percent - or roughly 69,000 - needed to be corrected.

Some customers have received second and even third corrections to their Forms 1099, a company spokesman said.

"We will be mailing out a new batch Friday because 59 mutual funds had to reallocate how they reported their dividends or capital gains," said Art Grieshaber, team leader for dividend reporting at Scottrade.

Publicly traded companies that pay dividends also faced reporting challenges. Many had to separate "qualified" from "non-qualified" dividends; provisions in the tax code can convert qualified dividends into non-qualified dividends if certain dividend-paying stocks were held for too short a time period in 2003. The qualified dividends are taxed at a lower rate.

Publicly traded real estate management companies, known as real estate investment trusts or REITs, faced even greater headaches. They pay non-qualified dividends. They also pay capital gains distributions, for which there were often three separate rates in 2003 for property held for more than a year.

Multiple classes for dividends and capital gains forced the information technology staff at Boston Properties Inc. (ticker symbol: BXP) to write new programs for its databases, said Michael Walsh, vice president of finance at Boston Properties.

"A uniform law for the full year would have made life easier," Walsh said.

Taxpayers who have already filed face several choices. They might have to file amended returns to correct dramatic errors in their reported income - and sizable underpayments of their tax bills.

Or, they might choose to file amended returns within three years after April 15 - the filing deadline - to correct errors that showed they paid too much tax for 2003. Some might decide to arrange follow-up appointments with their accountants or tax preparation specialists to see whether a Form 1099 error caused them to understate or overstate what they owed the IRS.

"The numbers on Forms 1099 (statements that report interest, dividend and capital gains distributions) go right to the IRS and the IRS pays close attention to verifiable errors," said Eileen Brewer, a tax preparation training specialist at H&R Block in Kansas City, Mo.

If you've shortchanged the IRS, the agency might get back to you. "But if it turns out you overpaid your taxes, they're never in a hurry to let you know," Brewer said.