Released: October 23, 2007

Lawmakers can’t agree how to fix AMT

Source: Sandra Block, USA Today

Millions of taxpayers could see their refunds delayed next year unless Congress acts quickly to approve a stopgap measure that would prevent a huge expansion of the alternative minimum tax, the IRS said Monday.

Without the temporary fix, more than 20 million taxpayers will owe the AMT when they file their 2007 tax returns, up from 4 million this year. The AMT is a parallel tax system that eliminates many popular deductions and credits. It was originally targeted at the very rich, but it has gradually expanded to ensnare upper-middle-class and even some middle-class taxpayers.

Congress is expected to eventually approve the fix. But lawmakers in the House and Senate disagree over how to pay the cost, estimated at more than $50 billion. Meantime, the clock is ticking for the IRS, which needs 12 to 13 weeks to reprogram its computers after the bill is signed before it can begin processing tax returns that would be affected by the changes.

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