AMT Patch To Delay Tax Filings By 1 Month
Friday, December 28, 2007
Millions of Americans will have to delay filing their tax returns next year until mid-February -- a month later than usual -- because Congress took so long to repair the alternative minimum tax.
The Internal Revenue Service said yesterday that as many as 13.5 million taxpayers who use five tax forms related to the AMT will have to wait to file their returns until the agency can reprogram its computers to comply with the new law. It estimated that taxpayers can begin sending in those forms around Feb. 11, nearly a month after the usual start of the filing season.
Not all of the 13.5 million taxpayers who use those forms are expected to file in those first four weeks, however. Based on traditional filing patterns, the IRS estimated that 3 million to 4 million taxpayers would probably have to postpone the timing of their filings because of the computer reprogramming.
"We regret the inconvenience the delay will mean for millions of early tax filers, especially those expecting a refund," said acting IRS Commissioner Linda Stiff.
Last week, Congress approved a one-year repair, or "patch," of the AMT, which had threatened to increase taxes on about 20 million middle- and upper-middle-income households. The levy was never meant to hit that group but rather was designed in 1969 to make sure the nation's richest individuals would have to pay at least some federal income tax even though they could otherwise find ways to eliminate their tax liability.
Lawmakers struggled all year to approve the AMT patch because a new rule required them to offset the $50 billion in lost revenue it would cost the U.S. Treasury. In the end, lawmakers could not agree how to pay for that large a loss, President Bush threatened to veto the tax increases that were being contemplated, and Congress voted to waive its pay-as-you-go rule and passed the patch without an offset.
The lengthy debate, however, pushed approval of the patch so late into the year that the IRS warned that the filing season would be disrupted. The IRS announcement yesterday provided the relatively good news that the disruption would not be as widespread as once feared.
Stiff said in an interview that the IRS began reprogramming some of its computers in early December because the changes could be done on a backup basis. When the law was changed, the backups were put into immediate use.
Still, five forms will have to be held back until Feb. 11. They involve tax credits for education, residential energy use, child- and dependent-care expenses, mortgage interest and the purchase of a first home by residents of the District.
Stiff said she was proud her agency was able to find a partial solution despite a "difficult environment." She warned that taxpayers will "experience some confusion."