AMT Nightmare May Await Many
Posted Nov 7, 2007 2:40 PM CDT
By Martha Neil
For the first time in more than five years, it appears unlikely that Congress will enact a so-called temporary patch to prevent the alternative minimum tax from hitting unwary middle-class wage-earners with an unexpectedly high tax bill for 2008.
The likely result, at minimum, is delayed tax refunds for many, even if Congress does put the patch in place next year, reports a McClatchy Newspapers article.
Another news agency doesn't take as gloomy a view of the prospects for enacting the AMT repair legislation. However, it does agree about the major tax problems that the lack of an AMT patch could create even it if is adopted later: Unless the legislation is enacted within a week or so, the delay would disrupt the 2008 tax filing season, holding up refunds for as many as 50 million taxpayers, reports Bloomberg, relying on information from U.S. Treasury Secretary Henry Paulson.
As the news agency explains: "The minimum tax was created in 1969 as a backstop to the regular tax system after lawmakers learned that hundreds of millionaires were avoiding paying any tax by claiming excessive deductions and exemptions. The tax was never indexed for inflation and now hits households with incomes between $200,000 and $500,000 and can affect families with incomes as low as $50,000."
Because the AMT no longer serves its original purpose, the ABA recommends that it be repealed or modified, notes an ABA Journal article on legislative issues.