Released: October 24, 2007

Treasury Secretary warns Congress to fix AMT

Source: Jeffrey H. Birnbaum, Washington Post (Free Registration)

With deadlines fast approaching for printing 2007 tax forms, Treasury Secretary Henry M. Paulson Jr. warned yesterday that Congress’s delay in repairing the alternative minimum tax could affect 50 million households, or more than a third of all American taxpayers.

Congress has known all year that it must “patch” the AMT to exempt some 21 million middle-income Americans from the levy, which was originally meant to target the wealthy. But in a letter to lawmakers yesterday, Paulson said that if the AMT is unchanged by the end of the year, 25 million households would pay an average additional $2,000 in federal income tax.

Furthermore, he wrote, unless the AMT is altered by mid-November, the IRS will not have enough time to reprogram its computers and rewrite its instruction kits. If that happens, he said, “as many as 25 million additional taxpayers could face delays in processing of their returns and payment of their refunds.”

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